Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698939850640.pdf (South Africa)
Friday, 11 November 2022] No 180—2022] FOURTH SESSION, SIXTH PARLIAMENT 1 PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA _____________________ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS _____________________ FRIDAY, 11 NOVEMBER 2022 _____________________ TABLE OF CONTENTS ANNOUNCEMENTS National Assembly and National Council of Provinces 1.

Classification of Bills by JTM .......................................................................................... 2 National Assembly 1.
Introduction of Bills ......................................................................................................... 3 TABLINGS National Assembly and National Council of Provinces 1.

Minister of Water and Sanitation ..................................................................................... 3 National Assembly 1.
Speaker ............................................................................................................................. 4 2 COMMITTEE REPORTS National Assembly 1.

Communications and Digital Technologies ..................................................................... 5 Police ................................................................................................................................ 6 2.

3.
3.

Finance ........................................................................................................................... 32 4.

Cooperative Governance and Traditional Affairs .......................................................... 47 National Council of Provinces 1.
Security and Justice ........................................................................................................ 64 ANNOUNCEMENTS National Assembly and National Council of Provinces The Speaker and the Chairperson 1.

Classification of Bills by Joint Tagging Mechanism (JTM) (1) The JTM in terms of Joint Rule 160(6) classified the following Bill as a section 76 Bill: (a) Division of Revenue Amendment Bill [B22–2022] (National Assembly – sec 76).
(2) The JTM in terms of Joint Rule 160(6) classified the following Bill as a Money Bill: (a) Adjustments Appropriation Bill [B23–2022] (National Assembly – sec 77).

(3) The JTM in terms of Joint Rule 160(6) classified the following Bill as a Money Bill: (a) Special Appropriation Bill [B24–2022] (National Assembly – sec 77).
(4) The JTM in terms of Joint Rule 160(6) classified the following Bill as a Money Bill: (a) Rate and Monetary Amounts and Amendment of Revenue Laws Bill [B– 25-2022] (National Assembly – sec 77).

(5) The JTM in terms of Joint Rule 160(6) classified the following Bill as a Money Bill: 3 (a) Taxation Laws Amendment Bill [B26–2022] (National Assembly – sec 77).
(6) The JTM in terms of Joint Rule 160(6) classified the following Bill as a section 75 Bill: (a) Tax Administration Laws Amendment Bill [B27–2022] (National Assembly – sec 75).

(7) The JTM in terms of Joint Rule 160(6) classified the following Bill as a section 75 Bill: (a) Deeds Registries Amendment Bill [B28-2022] (National Assembly – sec 75).

National Assembly The Speaker 1.


Introduction of Bills (1) Mr J S Malema, MP (a) Relocation of the Seat of Parliament Bill [B29-2022] (National Assembly – proposed sec 76) [Explanatory summary of Bill and prior notice of its introduction published in Government Gazette No 46442 of 27 May 2022.]

Introduction and referral to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160.

In terms of Joint Rule 154 written views on the classification of the Bill may be submitted to the JTM.
The Bill may only be classified after the expiry of at least three parliamentary working days since introduction.

Bill to be read a First Time.

TABLINGS National Assembly and National Council of Provinces 1.

The Minister of Water and Sanitation (a) Revised Business Plan of Bloem Water for 01 July 2022 – 30 June 2027.

(b) Revised Corporate Plan of Magalies Water for 2022/23 Review.

4 National Assembly 1.


The Speaker (a) Reply by the Minister of Cooperative Governance and Traditional Affairs to Report of the Standing Committee on Appropriations on Division of Revenue Bill [B 6 – 2022], as adopted by the House on 24 March 2022.

Referred to the Standing Committee on Appropriations and Portfolio Committee on Cooperative Governance and Traditional Affairs.

COMMITTEE REPORTS National Assembly 5 1.


Portfolio Committee on Communications and Digital Technologies Report on the Independent Communications Authority of South Africa (ICASA’s) Performance Management System pursuant to S6A of ICASA Amendment Act (Act No 13 of 2000), dated 8 November 2022.
Section 6A (1) of ICASA Act, requires the Minister, in consultation with the National Assembly (NA) to establish a Performance Management System (PMS) to monitor and evaluate performance of ICASA Chairperson and other Councillors.

The Act requires National Assembly’s consideration and approval to pave the way for implementation of the system.

It was envisaged that the implementation will commence during the 2021/22 Financial Year.
The PMS framework amends the one which was approved by the National Assembly in 2012 which expired in 2014 and it further addresses the challenges faced then which resulted in the system expiring without being successfully implemented, in particular with the following areas of concern: • The long process to appoint a retired judge to chair the Evaluation Panel as initially proposed, • ICASA Councillors wanting to sign a similar Performance Agreements because they argued that the collective nature of their work above matter has reference, • Lack of clear process to appoint the Evaluation Panel, • Blurring lines of accountability wherein all the Councillors, including the Chairperson, were required to sign their performance agreements with the Minister.
The Committee received a referral from the ATC on 18 August 2022 for consideration and adoption the PMS for ICASA Councillors by the Committee, following a letter from the Minister of Communications and Digital Technologies on 2 August 2022.

The letter was requesting that the Speaker to consider and approve the PMS for ICASA Councillors.
On Friday, 2 September 2022, the Chairperson of the Portfolio Committee requested Constitutional and Legal Services Office (CLSO) to vet the PMS framework, as was referred to the Committee for purposes of consultation required in terms of section 6A of the ICASA Act, 2000 (Act No.

13 of 2000) (ICASA Act) between the Minister and the National Assembly.
On 08 November 2022, the Committee met to review the PMS framework as per the received legal advice and subsequently deliberated and adopted the revised framework with the changes.

Report to be considered 2.
Report of the Portfolio Committee on Police on Public Participation: Protection of Constitutional Democracy against Terrorist and Related Activities Amendment Bill [B15 – 2022] (National Assembly – sec 75), dated 11 November 2022 The Portfolio Committee on Police (the Committee), having held public hearings on the Protection of Constitutional Democracy against Terrorist and Related Activities Amendment Bill [B15 – 2022], referred to and classified by the Joint Tagging Mechanism (JTM) as a section 75 Bill, reports as follows: 6 1.
Introduction The Protection of Constitutional Democracy against Terrorist and Related Activities Amendment Bill [B15 – 2022] (“Bill”) was introduced to Parliament for processing on 19 July 2022 (ATC No.

105- 2022] in terms of Joint Rule 159.

It is proposed that the Bill be dealt with in accordance with the procedure outlined in section 75 of the Constitution as is does not affect provinces or amend the Constitution (section 74).
The State Law Adviser indicated that it is not necessary to refer the Bill to the National House of Traditional and Khoi-San Leaders.

2.

Purpose of the POCDATARA Bill In summary, the proposals in the Bill aims to: 1) Amend certain definitions in the principal Act.

2) Insert some new offences related to maritime and aviation security.

3) Address the problem of foreign terrorist fighters.
4) Shift the responsibility for the publication of United Nations Security Council Resolutions in a notice in the Gazette.

In more detail.
the Bill provides for: • offences related to terrorist training and the joining and establishment of terrorist organisations; • offences related to foreign travel and attempts to leave the Republic under certain circumstances; • offences in respect of the possession and distribution of publications with unlawful terrorism • • • • related content; authorisation to be obtained from the Director of Public Prosecutions in respect of the investigation and prosecution of certain offences; the issuing of warrants for the search and cordoning off of vehicles, persons and premises; a direction requiring the disclosure of a decryption key and the effect of a direction to disclose a decryption key; the removal of, or making inaccessible, publications with unlawful terrorism related content; and to provide for matters connected therewith.
3.

Clauses of the Bill Clause 1 makes substantive changes to the definitions used in the principle Act, through proposed substitutions, deletions and insertions.
For instance, the definitions include that of critical infrastructure as per the Critical Infrastructure Protection Act, 2019; updated definition of explosive or other lethal devices; updated definition of property to include digital representation of perceived value (crypto- currency); and an updated definition of what is considered as terrorist activities.
7 Clause 2 proposes to amend section 3 of the principal Act (Offences associated or connected with terrorist activities) by providing for an offence in respect of entering, departing from, or transiting through or remaining in any country, for purposes of joining or supporting terrorist groups, in other words, to address “Foreign Terrorist Fighters”.

The clause further seeks to provide that it is an offence to support an entity engaged in terrorist activities.
Clause 3 proposes the insertion of section 3A in the principal Act, which provides for the prohibition of any publications with terrorist related content.
Clause 4 proposes the amendment of section 4 of the principal Act (Offences associated or connected with financing specified offences) by providing that it is an offence to facilitate the retention or control of property on behalf of, or for the benefit of, a specific entity identified by a Resolution of the United Nations Security Council and which is announced by the Minister of Finance in terms of section 26A(1) of the Financial Intelligence Centre Act, or in a notice given by the Director of the Financial Intelligence Centre in terms of section 26A(3) of the Financial Intelligence Centre Act.
Clause 5 seeks to insert section 4A (New: Offences relating to attempt to leave Republic) in the principal Act, in order to provide for an offence in respect of an attempt to leave the Republic for the benefit of, at the direction of, or in association with a terrorist group.

Clause 6 seeks to amend section 5 of the principal Act (Offences relating to explosives or other lethal devices) by extending the offence related to terrorist bombings from only public places to include private places.
Clause 7 proposes to amend section 6 of the principal Act (Offences relating to hijacking, destroying or endangering safety of a fixed platform), by inserting additional offences in accordance with international law.

Clause 8 proposes to amend the heading to section 7 (Offences relating to taking a hostage) to read “Offences relating to taking hostage”, thus deleting the word “a” in accordance with legislative drafting practices.
Clause 9 proposes the amendment of section 9 of the principal Act (Offences relating to hijacking an aircraft) to provide that it will be an offence to, by any other means, seize or exercise control of an aircraft for the purposes listed in section 9.

Section 9 currently provides only for the seizure of control of an aircraft through force or intimidation and/or the threat thereof.
The proposed insertion expands the methods/circumstances under which an aircraft can be hijacked – by any other means, other than force or intimidation.
Clause 10 proposes to amend section 10 of the principal Act (Offences relating to hijacking a ship or endangering safety of maritime navigation) by providing for additional offences in accordance with the Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation, 1988, as amended by the Protocol to the Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation, 2005.
Clause 11 proposes to amend section 11 of the principal Act (Offences relating to harbouring or concealment of persons committing specified offences) by substituting the reference to a specified offence with the offence of terrorism referred to in section 2, an offence associated or connected with terrorist activities referred to in section 3, any Convention offence, or an offence referred to in section 8 13 or 14.
The proposed amendment is consistent with the amendment proposed in section 13 to section 15 of the principal Act (clauses 14 to 16).
Clause 12 proposes to amend section 12 of the principal Act (Duty to report presence of person suspected of intending to commit of having committed an offence and failure too so report) by providing that no duty of secrecy or confidentiality, or any other restriction on the disclosure of information, whether imposed by legislation or arising from the common law or agreement, affects compliance by an accountable institution, supervisory body, reporting institution as defined in the Financial Intelligence Centre Act or any other person.
Clause 13 seeks to amend section 13 of the principal Act (Offences relating to hoaxes) by providing that the use of false threats to intimidate the public or to divert police resources in order to enable the commission of a crime is an offence.

Clause 14 seeks to simplify the language of section 15 of the principal Act (Jurisdiction in respect of offences) following the Constitutional Court judgment of S v Okah [2018] ZACC 3.
It further amplifies the jurisdictional issues of the principal Act, as well as where a warrant in respect of offences in terms of the principal Act may be obtained under the Criminal Procedure Act, 1977 (Act No.

51 of 1977).
51 of 1977).

The clause further provides that persons who are not citizens of the Republic, who are not ordinarily resident in the Republic or persons who are stateless, must be advised of their rights to consular assistance from the State, where they are ordinarily resident or of which they are citizens.

The clause, in terms of international obligations, provides that the relevant governments must be informed of the arrest of such a person for a Convention offence.
Clause 15 seeks to amend section 16 of the principal Act (Consent of National Director to institute proceedings and reporting obligations) and provides that the prosecution for an offence under section 13 may be instituted without the written authority of the National Director and may be authorised by the relevant Director of Public Prosecutions.
Clause 16 proposes the substitution in section 17 of the principal Act (Evidential matters and exclusions) for the reference to the Department of Foreign Affairs with the Department responsible for International Relations and Cooperation.

In 2009, the Department of Foreign Affairs was renamed the Department of International Relations and Cooperation.
Clause 17 aligns the sentencing, as laid down in section 18 of the principal Act (Penalties), with the severity of the offence, especially in relation to the financing of terrorism, increasing the length of imprisonment by the various courts, including the High Court, magistrates court or regional court.

It also provides for sentences in respect of the offences listed in sections 3A(3) and (4), 4A and 24B(13).
Clause 18 proposes to substitute section 23 of the principal Act as a consequence of the proposed repeal of section 25 (see below relating to publication and Parliamentary supervision) and expands on the ambit of, and what may be contained in: • • • • • a freezing order the making of ancillary orders the publication of orders the appointment of a curator ad litem interim orders 9 Clause 19 proposes to amend section 24 of the principal Act (Cordoning off, stop and search of vehicle and person) by providing for the inclusion of premises which may be cordoned off and searched in accordance with a warrant which may be issued by a judge i.e.no longer only vehicles and persons.
The section header will read “Cordoning off, stop and search of vehicle, person and premises”.

Clause 20 proposes the insertion of section 24A in the principal Act, which provides for the application for a decryption direction by an officer of the Directorate in terms of section 21 of the Regulation of Interception of Communications and Provision of Communication-related Information Act, 2002 (Act No.

70 of 2002).
70 of 2002).

The clause further proposes the insertion of section 24B in the principal Act, which provides that a member of the Directorate may apply to a competent court for an order to disable access to an internet or social media site with unlawful terrorism related content.

Clause 21 proposes the repeal of sections 25 and 26 of the principal Act in respect of Parliamentary supervision.
It is proposed that the publication of Resolutions of the United Nations Security Council relating to sanctions imposed on entities linked to terrorism and announced by notice in the Gazette should be performed by the Minister of Finance in terms of the Financial Intelligence Centre Act (no longer by the President for Parliamentary consideration).

Amendments to such announcement may be made by the Director of the Financial Intelligence Centre.
The proposal will ensure that all United Nations Security Council sanctions are being dealt with by the Financial Intelligence Centre and through the same processes.
Clause 22 proposes amendments to section 27 of the principal Act (Amendment and repeal of laws and transitional provisions) by providing that any proclamations issued under section 25(1), before the commencement of the Protection of Constitutional Democracy against Terrorist and Related Activities Amendment Act, 2022, remain valid and have the same force and effect as a notice announced by the Minister of Finance under section 26A(1) of the Financial Intelligence Centre Act, or in a notice given under section 26A(3) by the Director of the Financial Intelligence Centre.
Clause 22 also seeks to amend the principal Act to provide that any action taken in pursuance of a Proclamation issued under section 25(1), before the commencement of the Protection of Constitutional Democracy against Terrorist and related Activities Amendment Act, 2022, remains valid.
Clause 23 proposes amendments to the Preamble of the principal Act to reflect South Africa's changed status in respect of having become a Party to certain counter-terrorism international instruments, including international instruments concluded after the adoption of the principal Act, but not yet in force.

Clause 24 proposes amendments to the arrangement of sections of the principal Act.
This refers to the changes in section headings of the principal Act, new insertions and the substitution of sections in the principal Act.

Clause 25 proposed a full substitution of the Schedule to the principal Act.

Clause 26 provides for the short title and commencement of the Protection of Constitutional Democracy against Terrorist and Related Activities Amendment Act, 2022.

4.
4.

Costing 10 The Financial Intelligence Centre has indicated that the transfer of the function relating to the announcement and notification of United Nations Security Council Resolutions will have a minimal effect on the finances of the Financial Intelligence Centre.

5.

Public Participation Process and public hearings The initial call for public submissions was opened on 05 August 2022 and closed on 19 August 2022.
Parliament published the call for submissions in all official languages in national and regional newspapers.

After initial public hearings, the Committee extended the public participation period to 18 October 2022.

In total, the Bill was open for public comment for 10 weeks.

The Portfolio Committee on Police received seven public submissions on the POCDATARA Bill, including the following: 1) Afriforum (Hurter Spies Attorneys made the submission on behalf of Afriforum).
2) The Banking Association South Africa (BASA); 3) The International Committee of the Red Cross (ICRC); 4) The Sussex Terrorism and Extremism Research Network (STERN); 5) Mr. C Nel; 6) Fish Hoek Valley Ratepayers and Residents Association; 7) Dear South Africa.

The campaign from Dear South Africa gathered 25, 652 comments; and 8) Freedom of Religion SA NPC (For SA).

An invitation was extended to all organisations and individuals that made a submission, but not all accepted.
On 07 September 2022, the Committee received oral presentations on the submissions from Afriforum, the ICRC and STERN.

On 14 September 2022, the Civilian Secretariat for Police Service responded to public submissions.

On 26 October 2022, the Committee received an oral presentation from Mr Rob Hutchinson representing Dear South Africa.

During this meeting, the Civilian Secretariat for Police Service also responded to comments made by the Fish Hoek Valley Ratepayers and Residents Association.

5.1.
5.1.

Clause-by-clause summary of public submissions The table below provides a clause-by-clause summary of the written submissions received on the Bill.

Explanatory note: • Words in bold type in square brackets indicate omissions from existing enactments.

• Words underlined with a solid line indicate insertions in existing enactments.

5.1.1.
5.1.1.

Clauses 1: Definitions CLAUSE 1 “Property” 'property' means money or any other movable, immovable, corporeal or incorporeal thing, rights, and privileges, claims and securities and any interest therein and all includes any ORGANISATION COMMENTS AND RESPONSES Afriforum The section was already overbroad and vague.

The expansion thereof has exacerbated the problem.
Response by the Department: The definition has been aligned with the definitions of the same concept in the Prevention of Organised Crime Act (POC Act) and the CLAUSE 1 proceeds thereof, or any digital representation of perceived value, such as a crypto- currency, that can be traded or transferred electronically within a community of users of the internet who consider it as a medium of exchange, unit of account, or store of value and use it for payment or investment purposes, but does not include a digital representation of a fiat currency or a security as defined the Financial Markets Act, 2012 (Act No.
19 of 2012);" in 11 ORGANISATION COMMENTS AND RESPONSES Financial Intelligence Centre Act (FIC Act), as these Acts have to be implemented in conjunction with each other to address illicit financial flows related to terrorism.

BASA 1) The definition of ‘property’ in the form prior to its proposed amendments, is already all- encompassing definition and would include any digital representation of perceived value, which would include i.e.

crypto assets, fiat currency and securities.


2) The term ‘money’ in its broadest sense would include any tangible or intangible thing that functions as a means of exchange or debt settlement, a measure of value, a unit of account or as a store of value, and accordingly would include - a) Cash or currency, being physical coins and notes, as contemplated in the South African Reserve Bank Act of 1989 (‘SARB Act’).
b) A credit against an account held at a bank and which is convertible to cash or currency by the bank on demand.

c) Electronic money or e-money, as contemplated in the SARB’s position paper on electronic money, which is defined as "Monetary value represented by a claim on the issuer.
This money is stored electronically and issued on receipt of funds, is generally accepted as a means of payment by persons other than the issuer and is redeemable for physical cash or a deposit into a bank account on demand.” d) Virtual or digital currency (e.g.

Ripple).
Ripple).

In the SARB’s position paper on Virtual Currencies, it is defined as "a digital representation of value that can be digitally traded and functions as a medium of exchange, a unit of account and/or a store of value, but does not have legal tender status."
3) If there is concern as to whether virtual or digital currency constitutes ‘money’, and hence the proposed inclusion of the following in the definition of property, which defines ‘digital representation of perceived value’, as being ‘that CLAUSE 1 ORGANISATION COMMENTS AND RESPONSES 12 can be traded or transferred electronically within a community of users of the internet who consider it as a medium of exchange, unit of account, or store of value and use it for payment or investment purposes, but does not include a digital representation of a fiat currency or a security as defined in the Financial Markets Act, 2012 (Act No.
19 of 2012);" Proposal: BASA proposes the deletion of the words set out below: 'property' means money or any other movable, immovable, corporeal or incorporeal thing, and includes any rights, privileges, claims and securities and any interest therein and all proceeds thereof, or any digital representation of perceived value, such as a crypto-currency, that can be traded or transferred electronically within a community of users of the internet who consider it as a medium of exchange, unit of account, or store of value and use it for payment or investment purposes, but does not include a digital representation of a fiat currency or a security as defined in the Financial Markets Act, 2012 (Act No.
19 of 2012);"; b) As an alternative if not in support of the above, cross reference the definition of crypto-asset as proposed in Schedule 1 to the FIC Act (which is currently under review).
4) In relation to the definition of crypto asset (mentioned above), noting that within the next 12 – 18 months a crypto asset is contemplated as being declared a financial product, consideration to be given to deleting the following wording from the said definition ‘or a security as defined in the Financial Markets Act’ to refer to a financial product under FAIS?

(Excluding crypto assets now, anticipating its declaration as a financial asset.
Response by the Department: Crypto assets are neither money, movable or immovable property or a corporeal thing.

It is therefore important to create legal certainty that crypto assets are included in the concept of CLAUSE 1 ORGANISATION COMMENTS AND RESPONSES 13 property in the principal Act.

The definition will be amended to include “crypto asset” and a new definition of “crypto asset” will be inserted in the Bill.
The addition of 1(b)(iv), to wit, “can reasonably be regarded as being intended, in whole or in part, directly or indirectly, to… further the objectives of an entity engaged in terrorist activity”, further complicates an already notoriously contested definition.

‘Reasonably be regarded’ unacceptably introduces negligence as a form of mens rea for committing terrorist offences.

This is legally imprecise for purposes of criminal law and is a common issue with anti- terrorism legislation globally.
Response by the Department: The wording of “reasonably be regarded” has been part of the principal Act since its adoption in 2004 and it refers to an act which is intended or can be reasonably regarded as intended.

It has not been introduced only now.

Granted that there is no globally accepted definition of terrorism.

SALRC has recommended definition of “terrorist activity” as opposed to definition of “terrorism”.

Same model followed elsewhere, e.g Canada.


The organisation raised concern about the broadness of the definition.

It is proposed that the specific criteria for either a “serious public emergency” or a “general insurrection” be included.

Response: Serious public emergency is defined in South African law and need not be included in the Bill.

STERN Three parts to the definition of ‘terrorist activity’: (1) act, (2) intimidation/fear, (3) motive.
The amendment proposes to add the following to the definition of terrorist activity: (c) which is committed, directly or indirectly, in whole or in part, for the purpose of the advancement of an individual “Terrorist activity” Afriforum 'terrorist activity', with reference to this section and sections 2, 3 and 17(2), means any act – (a) [any act] committed in or outside the Republic, which— (i) involves the systematic, repeated or arbitrary use of violence by any means or method; (ii) involves the systematic, repeated or arbitrary release into the environment or any part of it or distributing or exposing the public or any part of it to— (aa) any dangerous, hazardous, radioactive or harmful substance or organism; (bb) any toxic chemical; [or] (cc) any microbial or other biological agent or toxin; or (dd) any weapon of mass destruction in terms section 1 of the Non-Proliferation of Weapons of Mass Destruction Act, including those with dual- purpose capabilities as defined in section 1 of the Non- Proliferation of Weapons of Mass Destruction Act, or any substance, mixture of substances, product or material contemplated in section 2(1) of the Hazardous Substances Act; (iii) endangers the life, or violates the physical integrity or physical freedom of, or causes serious bodily injury to or the death of, any person, or any number of persons; For SA ORGANISATION COMMENTS AND RESPONSES 14 or collective political, religious, ideological or philosophical motive, objective, cause of undertaking; Proposal: The reference to terrorist motive in the definition of terrorist activity should be removed based on the following: • International instruments and UN Security Council resolutions generally do not require a terrorist motive, which may be special difficult to prove.
• Criminal law does not normally require proof or motive.

• Distinction is more theoretical than empirical • Cases such as narcoterrorism show limits of ideological motive.

• Most groups in Africa today are hybrid.

Response by the Department: Proposed the removal of ‘motive’ which is already removed.
The Commentator is of the opinion that Municipal Mayors in terms of their work in relation to sewage treatment or water plants, Labour Unions in unsupported strike action disrupting essential services and even the President or Health Minister in declaring a State of Disaster during the Covid Lockdowns, would be seen as committing terrorist activities that would cause major economic loss.
Response from the Department: The examples mentioned by the Commentator will not fall within the ambit of the definition of ‘terrorist activity’, because it lacks the intent to cause harm.

When one combines the activities and the intent in the examples mentioned by the Commentator, it falls outside the ambit of the POCDATARA Act.
Fish Hoek Valley Ratepayers and Residents Association Dear South Africa 8.76% of the total submissions (2, 246 submissions) were against the Bill based on the definition of ‘terrorist activity’.
CLAUSE 1 (iiiA) is calculated to overthrow the government of the Republic or any other government; (iv) causes serious risk to the health or safety of the public or any segment of the public; (v) causes the destruction of or substantial damage to any property, natural resource, or the environmental or cultural heritage, whether public or private; (vA) causes the destruction of or substantial damage or interference to an information infrastructure or any part thereof; (vi) is designed or calculated to cause serious interference with or serious disruption of an essential service, facility or system, or the delivery of any such service, facility or system, whether public or private, including, but not limited to— (aa) a system used for, or by, an electronic system, including an information system; (bb) a telecommunication service or system; (cc) a banking or financial service or financial system; (dd) a system used for the delivery of essential government services; (ee) a system used for, or by, an essential public utility or transport provider; (ff) an essential or critical infrastructure [facility], information infrastructure, or a critical infrastructure complex; or (gg) any essential service designated as such in terms of the Labour Relations Act, 1995 (Act No.
66 of 1995), or essential emergency services, ORGANISATION COMMENTS AND RESPONSES 15 CLAUSE 1 such as police, medical or civil defence services; (vii) causes any major economic loss or extensive destabilisation of an economic system or substantial devastation of the national economy of a country; [or] (viii) creates a serious public emergency situation or a general insurrection in the Republic [,]; or (ix) is the offence of— (aa) unlawful access in terms of section 2 of the Cybercrimes Act; (bb) unlawful interception of data in terms of section 3 of the Cybercrimes Act; (cc) unlawful interference with data or a computer program in terms of section 5 of the Cybercrimes Act; (dd) unlawful interference with a computer data storage medium or a computer system in terms of section 6 of the Cybercrimes Act; (ee) unlawful acquisition, possession, provision, receipt or use of password, access code or similar data or device in terms of section 7 of the Cybercrimes Act; (ff) unlawful use or possession of a software or hardware tool for purposes of committing the offences listed in items (aa) to (ee); or (gg) cyber extortion in terms of section 10 of the Cybercrimes Act, which is committed with the intention to facilitate or to commit an act referred to in subparagraphs (i) to (viii) of this paragraph, whether the harm contemplated in [paragraphs] subparagraphs [(a)](i) to (vii) is or may be ORGANISATION COMMENTS AND RESPONSES 16 CLAUSE 1 suffered in or outside the Republic, and whether the activity referred to in subparagraphs (ii) to [(viii)] (ix) was committed by way of any means or method; and (b) which is intended, or by its nature and context, can reasonably be regarded as being intended, in whole or in part, directly or indirectly, to— (i) threaten the unity and territorial integrity of the Republic; (ii) intimidate, or to induce or cause feelings of insecurity within, the public, or a segment of the public, with regard to its security, including its economic security, or to induce, cause or spread feelings of terror,
 fear or panic in a civilian population; [or] (iii) unduly compel, intimidate, force, coerce, induce or cause a person, a government, the general public or a segment of the public, or a domestic or an international organisation or body or intergovernmental organisation or body, to do or to abstain or refrain from doing any act, or to adopt or abandon a particular standpoint, or to act in accordance with certain principles [,]; or (iv) further the objectives of an entity engaged in terrorist activity, whether the public or the person, government, body, or organisation or institution referred to in subparagraphs (ii) or (iii), as the case may be, is inside or outside the Republic; [and (c) which is committed, directly or indirectly, in whole or in part, for the CLAUSE 1 purpose of the advancement of an individual or collective political, religious, ideological or philosophical motive, objective, cause or undertaking;]''; and (s) by the deletion of subsection (4).
“Electronic communications service provider” 'electronic communications service provider' means electronic communications service provider as defined in section 1 of the Cybercrimes Act; ORGANISATION COMMENTS AND RESPONSES 17 BASA 1) Clarify if section 1(e) is limited to ‘independent’ service providers that operate such service as an only (sole) service – an independent Mobile Network Operator, or also applicable where this is provided as a service offering by another type of business, e.g., in collaboration with a primary 'electronic communications service provider’?
2) Clarify what is considered “who is deemed to be licensed”.

Does this extend to a telecommunications service provided which comprises of a Mobile Virtual Network Operator (MVNO), which is characterised as a mobile virtual network operator that does not operate under its own license and does not have the infrastructure to provide mobile services to its customers.

Instead, it leases wireless capacity from pre-existing Mobile Network Operator (MNO).
3) The clarity on this item will impact on comments below as this definition links to additional provisions of the Amendment Bill, to wit proposed section 3A that creates offences in relation to 'electronic communications service provider’.
Response by the Department: The definition applies to a person who provides an electronic communications service in terms of an individual license, a class license, a license exemption and in terms of any other law that deems such a person to be licensed to provide an electronic communications service.
The expression "deemed to be licensed” refers to an electronic communications service provider contemplated in the ECA or a person who is deemed to be licensed in terms of any other law to provide an electronic communications service.
Whether the definition of electronic CLAUSE 1 ORGANISATION COMMENTS AND RESPONSES 18 “Entity” BASA '' 'entity', with reference to sections 3, 4, and 14 (in so far as it relates to the aforementioned sections), 22[,] and 23 [and 25], means a natural person, or a group of two or more natural persons (whether acting in the furtherance of a common purpose or conspiracy or not), or a syndicate, gang, agency, trust, partnership, fund or other unincorporated association or organisation, or any incorporated association or organisation or other legal person, and includes, where appropriate, a cell, unit, section, subgroup or branch thereof or any combination thereof, and also any entity referred to in a Resolution of the United Nations Security Council and announced in a notice by the Minister of Finance under section 26A(1) of the Financial Intelligence Centre Act, or in a notice given under section 26A(3) by the Director referred to in section 1 of the Financial Intelligence Centre Act;'' communications service provider extends to a so called "mobile virtual network operator" will be determined whether such a person is licensed, exempted to be licensed or deemed to be licensed.
BASA suggests that it must be clear that an “entity” that has subsequently been removed from a Resolution of the United Nations Security Council (deleted section 25) and from a notice announced by the Minister of Finance under section 26A(1) of the Financial Intelligence Centre Act 38 of 2001 (the FIC Act), or from a notice given under section 26A(3) by the Director referred to in section 1 of the Financial Intelligence Centre Act will not be considered an “entity”.
2) Per paragraph 2.4 of the Memorandum on the Objects of POCDATARA Amendment Bill, all UN Security Council Resolutions, which include financial sanctions, must be published by the Minister of Finance in accordance with section 26A(1) of the FIC Act.

BASA is in agreement with the above interpretation and requirements of section 26A(1).

Therefore, the Minister does not have a discretion to publish or not publish.
3) Noting the above requirement, any UN Security Council Resolution, as amended (by the removal and/ or insertion of ‘entity’ (as defined) names, would also be required to be published in terms of section 26A(1).

4) In light of the above, it is unclear as to the purpose of section 26A(3)(a) – (b), as any such notice contemplated in these sections may only be done pursuant to a notice as gazetted under section 26A(1).
The intention hereof would never be for the purposes of amending an initial UN Security Council Resolution only – as subsequent UN Security Council Resolutions would be issued amending (adding or removing) sanctions and / or ‘entities’ in or from the UNSC Resolution.
5) Furthermore, noting the concern expressed in the Memorandum, regarding the delay in publication of notifications of entities listed in CLAUSE 1 ORGANISATION COMMENTS AND RESPONSES 19 the UN Security Council Resolution by the President in terms of POCDATARA, a similar concern is noted in relation to the publication by the Minister of Finance as contemplated in section 26A(1) of the FIC Act.
Noting that ‘entities’/ accountable institutions should not be prejudiced by the delay in publication in instances where sanctions and/ or entities have been amended.
Proposal: BASA suggests that the following wording be considered: “entity”, with reference to sections 3, 4, and 14 (in so far as it relates to the aforementioned sections), 22, and 23 and 25, means a natural person, or a group of two or more natural persons (whether acting in the furtherance of a common purpose or conspiracy or not), or a syndicate, gang, agency, trust, partnership, fund or other unincorporated association or organisation, or any incorporated association or organisation or other legal person, and includes, where appropriate, a cell, unit, section, sub- group or branch thereof or any combination thereof, and also any entity referred to in a Resolution of the United Nations Security Council and announced in a notice by the Minister of Finance under section 26A(1) of the Financial Intelligence Centre Act, [and] or in a notice given under section 26A(3) by the Director referred to in section 1 of the Financial Intelligence Centre Act.
Alternatively, BASA suggests the deletion of the words: “in a notice given under section 26A(3) by the Director referred to in section 1 of Financial Intelligence Centre Act.” Response by the Department: Application of the provisions of the FIC Act relating to targeted financial sanctions to an entity, is determined by details of the notices that the Director: FIC issues and includes a notice by the Director that a designation by the UNSC no longer applies to an entity, in other words has been de-listed as an entity by the UNSC.
It has been noted that there is a conflict CLAUSE 1 ORGANISATION COMMENTS AND RESPONSES 20 between Clause 25 of the General Laws (Anti- Money Laundering and Combating Terrorism Financing) Amendment Bill, that seeks to delete the fact that the Minister of Finance will announce the adoption of Resolutions by the UNSC in the Gazette, and now provides that the Director: FIC will publish such notice in the Gazette, with the POCDATARA Bill where there are still references to notices under s26A(1) of the FIC.
The relevant clauses in the Bill will be amended to align the 2 pieces of legislation.

ICRC An International Humanitarian Law (IHL) saving clause separates the law applicable to the conduct that occurs in peace time from the conduct that occurs during an armed conflict: • • If the conduct qualified as ‘terrorist’ occurs in peace time, IHL would not apply.
If the conduct occurs within the context of an international or a non-international armed conflict, it will not be governed by the counter-terrorism legislation and IHL will govern the situation as the lex specialis.

Inclusion of an IHL Saving clause is consistent with South Africa’s obligations under international law.

• Allows national liberation movements not to be classified as “terrorist groups” under counter-terrorism legislation.
domestic • counter-terrorism • Similar IHL Saving clauses are included legislation of in Ethiopia, Chad, the United Kingdom, Ireland, New Zealand and Canada.

• Also recommended by AU Model Anti- Terrorism law and UNSC Resolution 2462 (2019).

Response from the Department: The Terror Financing provisions in the Bill are derived from the Convention for the Suppression of the Financing of Terrorism (TF).

The crime only applies to financing terrorist entities and activities.
The ICRC renders humanitarian Proposed retention on section 1(4) S1(4) reads: Notwithstanding any provision of this Act or any other law, any act committed during a struggle waged by peoples, including any action during an armed struggle, in the exercise or furtherance of their legitimate right to national liberation, self- determination and independence against colonialism, or occupation or aggression or domination by alien or foreign forces, in accordance with the principles of international law, especially international humanitarian law, including the purposes and principles of the Charter of the United Nations and the Declaration on Principles of International Law concerning Friendly Relations and Cooperation among States in accordance with the said Charter, shall not, for any reason, including for purposes of prosecution or extradition, be considered as a terrorist activity, as defined in subsection (1).
CLAUSE 1 ORGANISATION COMMENTS AND RESPONSES 21 assistance to victims of armed conflicts, and these cannot remotely fall within the ambit of the TF.

Open ended reference to humanitarian organisations would open the door to terrorist entities impersonating such organisations.

Immunities recognized for the ICRC in terms of international law, exempt if from having to testify in criminal proceedings of tribunals and domestic courts.
Treatment of victims would constitute proof that they were in fact victims of war crime sought to be prosecuted.

Giving evidence of such, the ICRC would either not be allowed into conflict zones or being itself targeted.

Immunity exists, due to the interests of alleviating human suffering that out way the giving of evidence.

This is entirely different from exempting the ICRC from the provisions of a criminal offence.

There is therefore no necessity for an exemption as per the ICRC submission.
The National Director for Public Prosecutions must authorize all TF prosecutions and it is therefore sufficient safeguard.

5.1.2.
5.1.2.

Clauses 2 and 3: Offences associated or connected with terrorist activities CLAUSE Clause 2 Clause 2 proposes to amend section 3 of the principal Act (Offences associated or connected with terrorist activities) by providing for an offence in respect of entering, departing from, or transiting through or remaining in any country, for purposes of joining or supporting terrorist groups, in other words, to address “Foreign Terrorist Fighters”.
The clause further seeks to provide that it is an offence to support an entity engaged in terrorist activities.

ORGANISATION COMMENTS AND RESPONSES STERN The amendment proposes to add the following regarding training for terrorist-related activities: (4) A person commits an offence if he or she receives training and is aware that such training is, wholly or partly, provided for purposes connected with the commission or preparation of terrorist activities or Convention offences.
Proposal: The section should clarify that terrorist training itself is an offence.

In the current format, the law can be interpreted to mean that only training for a specific act is criminalised – places the burden on prosecutors to provide that a specific terrorist activity was planned.
Response by the Department: The Department accepts these comments and the necessary amendments to s3 and s3(4) will be effected, to provide for online training to be CLAUSE ORGANISATION COMMENTS AND RESPONSES 22 Fish Hoek Valley Ratepayers and Residents Association Afriforum Clause 3 Insertion of 3A Clause 3 proposes the insertion of section 3A in the principal Act, which provides for the prohibition of any publications with terrorist related content.
included; and not only the receipt of training, but providing training Refers to clause 2(b) that seeks the substitution of section 3(1)(c) in the principal Act and insertion of the words “joining, supporting or in any other manner” in the section.

These words should be defined.

The insertion of section 3 (3) by clause 2(f) and inclusion of “other lethal device” by implication means that training in the use handguns and rifles, may be seen as terrorist activities.
Response by the Department: The concepts of joining and supporting an entity engaging in terrorist activity, were inserted to strengthen the section and the words must be understood in line with their ordinary meaning and need not be defined in the legislation • Unjustifiably violates rights to freedom of expression, association, and conscience.

• Vulnerable to disproportionate, arbitrary, discretionary abuse.

• Overbroad definition and form of intent violates principle of legality.
Response by the Department: The media and in particular electronic media and platforms are extensively being used to recruit persons to join terrorist organisations or to commit terrorist acts, and it’s therefore necessary to address it in the Bill.

Any prosecution in terms of these provisions may only be instituted with the written authorization of the National Director of Public Prosecutions.

The section 3A is based on provisions in Chapter 11 in the United Kingdom Terrorism Act, 2006.
Any person charged with committing an offence under this section, may raise a defence i.to.

s3A(5).

Defences may include: That the person did not know that the document contained information related to terrorism.

The person’s possession was for purposes of carrying out work as a journalist, or Academic research.
STERN Section 3(2)(e) may raise as a defence based on: • the fact that at the time of the person’s action or possession, the person did not know, and had CLAUSE ORGANISATION COMMENTS AND RESPONSES 23 no reason to believe, that the document or record in question contained, or was likely to contain, information of a kind likely to be useful to a person preparing to engage in a terrorist activity; or • the person’s action or possession was for the purposes of - o carrying out work as a journalist; or o academic research.
Proposal: May want to adjust the language of legitimate defence to broaden it to “exercising a profession in the public interest such as”.

ICRC For SA • Absence of a clause within POCDATRA to from criminalisation exclusively exempt by humanitarian humanitarian and impartial organizations is concerning.
carried action out • The wording of the Bill currently may unintentionally criminalise the provision of humanitarian assistance: o Section3(2)(b) of POCDATRA could potentially criminalise provision of medical assistance to wounded people in areas controlled by a Non-State Armed Group.

o Section3(2)(c) of POCDATRA could potentially criminalise IHL trainings to members of a group classified as a terrorist.
The organisation submitted that this poses a threat to the right to freedom of expression and that the limited grounds for defence do not offer sufficient protection to ensure that constitutionally protected speech is not limited.

It is further argued that the State failed to conduct an analysis that the Bill meets the test laid down in section 36 of the Constitution related to the limitation of constitutional rights.
For SA proposes that the section (clause) should be scrapped or the prohibition be amended to refer to “propaganda for war”.

Response by the Department: CLAUSE ORGANISATION COMMENTS AND RESPONSES 24 Freedom of religion, expression and association are rights that are protected in terms of the Constitution of the Republic of South Africa.
In terms of section 36 of the Constitution, any limitation of these rights must be justified to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom, taking into account all relevant factors, including: (a) the nature of the right; (b) the importance of the purpose of the limitation; (c) the nature and extent of the limitation; (d) the relation between the limitation and its purpose; and (e) less restrictive means to achieve the purpose.
See the judgments of MAGAJANE v CHAIRPERSON, NORTH WEST GAMBLING BOARD AND OTHERS 2006 (2) SACR 447 (CC); MISTRY v INTERIM MEDICAL AND DENTAL COUNCIL OF SOUTH AFRICA AND OTHERS 1998 (4) SA 1127 (CC) and INVESTIGATING DIRECTORATE: SERIOUS ECONOMIC OFFENCES AND OTHERS v HYUNDAI MOTOR DISTRIBUTORS (PTY) LTD AND OTHERS; IN RE HYUNDAI MOTOR DISTRIBUTORS (PTY) LTD AND OTHERS v SMIT NO AND OTHERS 2000 (2) SACR 349 (CC), regarding the limitation of the right to privacy in respect of criminal offences.
See ECONOMIC FREEDOM FIGHTERS AND OTHERS V MINISTER OF JUSTICE AND CORRECTIONAL SERVICES AND OTHERS (Case CCT 201/19), regarding freedom of expression in respect of criminal offences.

1) Section 3A(2)(d) is very onerous, especially for electronic communications service providers – the offence lies in “enables them to obtain, read, listen to, or look at such a publication” whereas such a provider may only provide the access mechanism but has no control over what content is accessed through its service.
If the provider for example, enables broad internet access, and the user then chose to search and access prohibited material, the provider will be on the wrong side of the law – this is too wide a provision, especially in view of sub-section (4).

BASA CLAUSE ORGANISATION COMMENTS AND RESPONSES 25 2) Given the nature of the services of accountable institution/s (see above), this could be directly applicable to them and impact business operations as it would potentially require content screening.
This could have massive impact; may require additional due diligence/screening; changes to processes, etc.

Proposal by BASA: 1) It is proposed that the content of the proposed section 3A(2)(d) which states ‘provides a service to others that enables them to obtain, read, listen to, or look at such a publication, or to acquire it by means of a gift, sale or loan, be deleted.
2) In the absence of its deletion, we propose the following amendment – (d) provides a service to others that enables them to obtain, read, listen to, or look at such a publication, or to acquire it by means of a gift, sale or loan.

3) In the event that section 3A(2)(d) is not deleted, it is recommended that a new provision be drafted or amendment be made to draft section 3A(5) to allow the defence contemplated in section 3A(5)(a) to apply in relation to section 3A(2)(d) as well.
Response by the Department: The comments are accepted, but there is no necessity to amend the defence clause 3A(5), as the defences applicable in the clause finds application to the entire section 3A, and therefore includes s3A(2)(d).

5.1.3.

Clauses 4 to 10: Convention Offences CLAUSE ORGANISATION COMMENTS AND RESPONSES BASA Please see comment above related to the definition of “entity”.
Clause 4 Clause 4 proposes the amendment of section 4 of the principal Act (Offences associated or connected with financing specified offences) by providing that it is an CLAUSE ORGANISATION COMMENTS AND RESPONSES 26 offence to facilitate the retention or control of property on behalf of, or for the benefit of, a specific entity identified by a Resolution of the United Nations Security Council and which is announced by the Minister of Finance in terms of section 26A(1) of the Financial Intelligence Centre Act, or in a notice given by the Director of the Financial Intelligence Centre in terms of section 26A(3) of the Financial Intelligence Centre Act.
Clause 5: Insertion of 4A Clause 5 seeks to insert section 4A (New: Offences relating to attempt to leave Republic) in the principal Act, in order to provide for an offence in respect of an attempt to leave the Republic for the benefit of, at the direction of, or in association with a terrorist group.

Afriforum Unjustifiable violation of freedom of movement and unnecessary duplication of pre-existing offence captured in other legislation.
Response by the Department: Purpose of the insertion is to provide legal certainty that South African law criminalizes situation where persons abuse freedom of movement and utilize South African territory as a springboard to join foreign terrorist organisations.

5.1.4.
Clause 12: Duty to report CLAUSE ORGANISATION COMMENTS AND RESPONSES BASA Clause 12 Clause 12 proposes to amend section 12 of the principal Act (Duty to report presence of person suspected of intending to commit of having committed an offence and failure too so report) by providing that no duty of secrecy or confidentiality, or any other restriction on the disclosure of information, whether imposed by legislation or arising from the common law or agreement, affects compliance by an accountable Whilst there is no hierarchy in legislation, section 12(9) by creating the obligation to comply with this section, notwithstanding an obligation imposed by legislation creates a hierarchy without substantiation, therefore.
In relation to reference to “reporting institutions”, note that once the amendments to Schedule 1 to the FIC Act are effective, the reference to “reporting institution” may/ will be no longer applicable.
Proposal: BASA proposes that section 12(9) be reworded as follows: CLAUSE ORGANISATION COMMENTS AND RESPONSES 27 “For the purposes of this Act, no duty of secrecy or confidentiality or any other restriction on the disclosure of information, may affect the duty of compliance with this section by an accountable institution, supervisory body or reporting institution as defined in section 1 of the Financial Intelligence Centre Act, or any other person.” Response by the Department: The Department disagrees that the addition of section 12(9) creates a hierarchy of reporting obligations.
The proposed section 12(9), is derived from a similar provision in s37(1) of the Financial Intelligence Centre Act, 2001.

There is no reason why the reporting duty and the exclusion of privilege in the Protection of Constitutional Democracy against Terrorist and Related Activities Act, 2004, should differ from that in the Financial Intelligence Centre Act, 2001.

Amendments to clarify the law’s jurisdiction, are welcomed.
As noted in the Constitutional Court’s judgement in S v Okah [2018] ZACC 33, some of the language around the law’s jurisdiction is unclear.

The difficulty of both the Supreme Court of Appeal4 and the Constitutional Court’s interpretation of the language in POCDATARA in the Okah case shows the importance of specificity and clarity in drafting legislation.

Response by the Department: These proposals regarding jurisdiction in the Bill, is supported by STERN.
STERN institution, supervisory body, reporting institution as defined in the Financial Intelligence Centre Act or any other person.
In terms of common law, the clause proposes the right to legal professional privilege as between attorney and client in respect of communications made in confidence between the attorney and client for the purposes of legal advice or litigation which is pending or which has commenced; or a third party and an attorney for the purposes of litigation which is pending or has commenced.
Clause 14 seeks to simplify the language of section 15 of the principal Act (Jurisdiction in respect of offences) following the Constitutional Court judgment of S v Okah [2018] ZACC 3.

It further amplifies the jurisdictional issues of the principal Act, as well as where a warrant in respect of offences in terms of the principal Act may be obtained under the Criminal Procedure Act, 1977 (Act No.

51 of 1977).
51 of 1977).

The clause further provides that persons who are not citizens of the Republic, who are not ordinarily resident in the Republic or persons who are stateless, must be advised of their rights to consular assistance from the State, where they are ordinarily resident or of which they are citizens.
The clause, in terms of international obligations, CLAUSE ORGANISATION COMMENTS AND RESPONSES 28 provides that the relevant governments must be informed of the arrest of such a person for a Convention offence.

5.1.5.
Clauses 18 to 20: Investigating powers and freezing orders CLAUSE ORGANISATION COMMENTS AND RESPONSES Clause 18 Clause 18 proposes to substitute section 23 of the principal Act as a consequence of the proposed repeal of section 25 (see below relating to publication and Parliamentary supervision) and expands on the ambit of, and what may be contained in: a freezing order the making of ancillary orders the orders the appointment of a curator ad litem interim orders publication • • of • • • Afriforum • ‘Reasonably be regarded’ introduces a form of negligence as sufficient ‘mens rea’ for criminal liability.
• Overextends the power of police officials.

• Likely to lead to complex litigation.

• Soon to be dealt with in specialist amendments to FICA.

Response by the Department: The amendment relating to the penalties for terrorist financing offences is necessary to establish parity with equally serious offences of the Prevention of Organized Crime Act, such as the offence of money laundering.
BASA Fish Hoek Valley Ratepayers and Residents Association See comment above relating to the definition of an ‘entity’.

The Bill’s amendment of section 23 in relation to Freezing Orders is troublesome and the conditions under which the High Court can assume control over property must be specified.

Response from the Department: The High Court may make an order under section 23 only if the state’s application shows that the conditions that are described in subsection 23(2) are met.
The grounds for making a freezing order are therefore clear.

The terms of such an order are also clear and provided for in subsection 23(1).

The condition for any further orders that the High Court may make relating to the control of, and care for, property that is subject to the freezing order, is that such orders are strictly limited to what is appropriate for the proper, fair and effective execution of the freezing order.

These are spelt out in detail in subsection 23(4).
No further conditions are therefore required to assist the Court in making an order that strikes a balance CLAUSE ORGANISATION COMMENTS AND RESPONSES 29 Clause 20 Clause 20 proposes the insertion of section 24A in the principal Act, which provides for the application for a decryption direction by an officer of the Directorate in terms of section 21 of the Regulation of Interception of Communications and Provision of Communication-related Information Act, 2002 (Act No.

70 of 2002).
70 of 2002).

The clause further proposes the insertion of section 24B in the principal Act, which provides that a member of the Directorate may apply to a competent court for an order to disable access to an internet or social media site with unlawful terrorism related content.

between the objectives of freezing property that is implicated in the financing of terrorist activities or organisations and fairness to whomever may have an interest in property that is subject to a freezing order.
• Potential for abuse as seen with RICA legislation.

Afriforum • Potentially unjustifiable violation of the right to privacy, given nebulous definition of ‘terrorist activity’ and relaxed burden of proof.

it duplicates similar but tested and • Impractical as tempered processes already accepted by judiciary.

• Likely to lead to litigation.


Response by the Department: Section 24A is only to be applied once the State has, in terms of the law seized computer equipment where there is already a suspicion that a crime had been committed and it is necessary to obtain a decryption order.

Such a decryption order can only be obtained through a designated judge in terms of RICA.
It is appreciated that the effectivity of the section is limited, but it is not always the dark web that is used in the recruitment of terrorists.

Furthermore, if South Africa does not provide for this it may lead to abuse from South Africa through internet service providers to recruit terrorists.
Section 24A will be revisited to specifically deal with decryption assistance and passwords or other access technology restrictions on electronic communications devices – Reference to United Kingdom laws (UK Terrorism Act, 2006).

Fish Hoek Valley Ratepayers and Residents Association The insertion of section 24B is problematic as the demand for a decryption key for detecting any crime falls on the side of discovery and poor investigative work.

There is an invasion of privacy.

5.1.6.


Clause 21: Resolutions of UN Security Council CLAUSE ORGANISATION COMMENTS AND RESPONSES Clause 21 Deletion of sections 25 and 26 Afriforum • Repeal of S26 is an unjustifiable violation of separation of powers doctrine.

30 • S26A of Financial Intelligence Centre Act tabling of makes no provision announcement/designation in Parliament.
for Note: As stated in the analysis of the Bill, Parliament does not have the power to amend resolutions of the UN Security Council.

5.1.7.

Dear South Africa The organisation, Dear South Africa, ran a campaign on the POCDATARA Amendment Bill.

As part of the campaign, a total of 25, 652 comments were received by the Portfolio Committee on Police.

Of the total number of comments, 95.82% (24, 580) do not support the Bill, 3.8% (976) do not support the Bill fully, and 0.37% (96) supported the Bill.
The top reason for not supporting the Bill was “the Bill in its entirety” (52.35% or 13, 429 comments), followed by “freedom of expression and association” (27.92% or 7, 163 comments), “definition of terrorist activity” (8.76% or 2, 246 comments), and “definition of terrorist” (5.23% or 1, 342 comments).
As per the presentation given by Mr Rob Hutchinson representing Dear South Africa, the following may be noted in terms of the collective submissions: Of the submissions supporting the Bill, the participants who submitted valid comments are mostly in full support of the Bill, with majority expressing concerns over the possible greylisting of South Africa by the Financial Action Task Force.
Some participants are concerned over the growing threat of terrorism, both domestic and from abroad, with concerns over the transparency of non-profit organisations.

Of the submissions that do not support the Bill fully, comments from participants in this category express concerns over an encroachment on constitutional rights due to the vague and unclear definitions of terrorist and terrorist activities.
Many express a need for the amendment to curb extremist action, damage to state resources or infrastructure, corrupt activities and politically-motivated agendas that promote violence and destruction.

However, a strong concern remains on the loose and vague definitions within the Bill which are open to interpretation and abuse.

Concerns are also raised over the ability to enforce laws and mentions are made of existing laws and legislation which are more than adequate and proven to be effective.
Of the submissions that do not support the Bill, the vast majority of participants are concerned over the erosion of the Constitution of South Africa and, most notably, the Bill of Rights.

Emphasis was placed on the threat to freedom of expression, freedom of association, freedom of religion, and to South Africa’s democracy due to unclear and vague definitions of terrorism and terrorist activities.
Concerns are raised over the amendments being abused to stifle criticism of the government or its policies and proposals – essential to a functional democracy.

Further concern ranges from the silencing of political opponents through to misinterpretation of the definitions by authorities – with remarks around moving back to Apartheid-era laws and legislation.

6.
6.

Conclusion Parliament’s Portfolio Committee on Police is satisfied with the positive and detailed discussions that took place during public hearings.

The Committee expresses its gratitude to the organisations and individuals that made submissions on the POCDATARA Bill and reiterates the importance of public participation when Parliament deals with legislation.

31 Report to be noted.

3.


Report of the Standing Committee on Finance on the General Laws (Anti- Money Laundering and Combatting of Terrorism Financing) Amendment Bill (B18B-2022), dated 11 November 2022 32 Having considered the General Laws (Anti-Money Laundering and Combatting of Terrorism Financing) Amendment Bill (B18B-2022), the Standing Committee on Finance reports as follows: 1.

Introduction and Background 1.1.


On 31 August 2022, the Standing Committee on Finance was briefed by the National Treasury and the Financial Intelligence Centre (“the Centre” or “FIC”) on the General Laws (Anti- Money Laundering and Combatting of Terrorist Financing) Amendment Bill (B14- 2022), hereinafter GLAB 2022.
The GLAB 2022 is an omnibus Bill aimed at amending various pieces of legislation to address deficiencies related to combatting money laundering and terrorism financing and bring South Africa into compliance with the global standards set by the Financial Action Task Force (FATF), the global regulator of anti-money laundering and counter terrorism financing.

1.2.
1.2.

South Africa is a member of FATF, which in 2019, conducted a peer review and produced a Mutual Evaluation Report (MER) (October 2019) on the country’s implementation of FATF’s 40 Recommendations (FATF Standards) against money laundering and terrorism financing.

South Africa was rated poorly in the MER as it was found to have not complied with 20 of the 40 FATF Standards.

1.3.
The FATF Standards that South Africa was found to be partially compliant or non- compliant on were: Recommendation 1: Assessing risk and applying a risk based approach to compliance; Recommendation 2: National cooperation and coordination; 33 Recommendation 5: Terrorism financing offence; Recommendation 6: Targeted financial sanctions- proliferation; Recommendation 8: Non-profit organisations; Recommendation 10: Customer due diligence; Recommendation 12: Politically exposed persons; Recommendation 14: Money or value transfer services; Recommendation 15: New technologies; Recommendation 17: Reliance on third parties; Recommendation 18: Internal controls and foreign subsidiaries; Recommendation 22 and 23: Designated non-financial bodies and persons’ (DNFBP’s) customer due diligence and other measures; Recommendation 24 and 25: Transparency and beneficial ownership (BO) of legal persons and legal arrangements; Recommendation 26: Regulation and supervision of financial institutions; Recommendation 27: Powers of supervisions; Recommendation 28: Regulation and supervisions of DNFBPs; and Recommendation 32: cash couriers.
1.4.

FATF had also measured the effectiveness of the implementation of its Standards by South Africa and found this had not yielded the intended outcomes on all the 11 immediate outcomes that it examines.
These eleven outcomes can be described as follows: Immediate Outcome 1: Risk, policy and coordination; Immediate Outcome 2: International cooperation; Immediate Outcome 3: Supervision; Immediate Outcome 4: Preventive measures; Immediate Outcome 5: Legal persons and arrangements; Immediate Outcome 6: Financial intelligence on money laundering and terrorism financing; Immediate Outcome 7: Money laundering investigations; Immediate Outcome 8: Confiscation; Immediate Outcome 9: Terrorism financing investigations and prosecutions; Immediate Outcome 10 Terrorism financing preventive measures and financial sanctions; and Immediate Outcome 11: Proliferation financing sanctions.
1.5.

As a result of these findings by the MER 2019, South Africa was placed under International Cooperation Review Group observation for a period of one year.

This observation ended in October 2022, where South Africa submitted reports on technical 34 compliance and effectiveness outcomes.

This gave South Africa a chance to rectify the deficiencies identified during the peer review process.

1.6.
1.6.

In February 2023, South Africa’s performance in rectifying its deficiencies will be considered at the FATF Plenary Meeting, whereby the FATF will decide whether to place South Africa on a “grey-list” of countries that need continued monitoring and observation or not.

1.7.
1.7.

During the briefing and deliberations by the Committee, the National Treasury and the FIC assured the Committee that significant progress was being made in addressing South Africa’s technical compliance issues raised by FATF in the 2019 MER.

They explained that technical compliance basically refers to the adequacy of the country’s AML/CFT laws and regulatory framework.
Technical compliance deficiencies mean that the country must amend its laws or introduce new provisions so that the country’s legal and regulatory framework complies with FATF Standards.

1.8.
1.8.

The National Treasury and FIC however stated that while it would seem easy to rectify the technical compliance deficiencies, achieving the 11 effectiveness measures would be difficult as they depended on the actions of many other role-players such as the police, the AFU and prosecution authorities, not the National Treasury and FIC alone.

1.9.
To deal with the technical deficiencies which require legislative amendments and development, a working group was established comprising of National Treasury, FIC, Department of Justice and Constitutional Development, Department of Social Development, Civilian Secretariat for Police Service, Department of Trade, Industry and Competition, Companies and Intellectual Property Commission, South African Reserve Bank, South African Revenue Service, Prudential Authority, and the Financial Sector Conduct Authority.
This working group came up with the GLAB 2022 which addresses 14 technical compliance deficiencies (Recommendation 7,8,12,15,17, 18, and 22-28) through amending the following laws: the Financial Intelligence Centre Act, 2001 (Act No.

38 of 2001); the Nonprofit Organisations Act, 1997 (Act No.

71 of 1997); the Trust Property Control Act, 1988 (Act No.

57 of 1988); the Companies Act, 2008 (Act No.

71 of 2008), and the Financial Sector Regulation Act, 2017 (Act No.

9 35 of 2017).

1.10.


There is also the Protection of Constitutional Democracy Against Terrorist and Related Activities Act 2004 (POCDATARA) Amendment Bill currently in Parliament which is being processed by the Portfolio Committee on Police, which addresses technical deficiencies relating to Recommendations 5 and 6 of FATF Standards.

The remaining four deficiencies (Recommendations 1, 2, 14 and 32) will be addressed through regulatory and policy interventions.

2.

SUMMARY OF PROPOSED AMENDMENTS 2.1.
The Bill has got 62 clauses which seek to amend the following pieces of legislation: 2.1.1. the Trust Property Control Act, 1988, (clause 1 to 7) by inserting definitions of ‘‘accountable institution’’ and ‘‘beneficial owner’’; by imposing certain requirements on trustees; by specifying matters that would disqualify a person from being appointed or continuing to act as a trustee; by providing for the removal of a trustee who becomes disqualified to continue to act as a trustee; by specifying information that must be kept by trustees in relation to beneficial owners in relation to trusts; by requiring the Master to maintain a register containing information relating to beneficial ownership of trusts, and providing for access to information regarding beneficial ownership; and by specifying certain offences; 2.1.2. the Nonprofit Organisations Act, 1997, (clause 8-14) by requiring registration in terms of the Act; by enabling the Nonprofit Organisations Directorate, in order to perform its functions, to collaborate, co-operate, co-ordinate and enter into arrangements with other organs of state; by requiring nonprofit organisations to submit prescribed information 36 about the office-bearers, control structure, governance, management, administration and operations of nonprofit organisations to the director; to require prescribed information relating to the office-bearers, control structure, governance, management, administration and operations of nonprofit organisations to be included in the register that the director must keep, and by providing for access to that information; by providing for grounds for disqualification for a person to be appointed or continuing to act as an office-bearer of a nonprofit organisation; by providing for the removal of an office-bearer; and by providing for certain offences; 2.1.3. the Financial Intelligence Centre Act, 2001, (clause 15-51) through amending the definitions of ‘‘beneficial owner’’, ‘‘domestic prominent influential person’’ and ‘‘foreign prominent public official’’, and
 inserting a definition of ‘‘prominent influential person’’; by amending the objectives of the Financial Intelligence Centre (‘‘Centre’’); by amending the functions of the Centre to include the provision of forensic information; by empowering the Centre to request information held by other organs of state; by providing for additional and ongoing due diligence measures, and by amending the process followed when there are doubts about the veracity of information; by aligning certain provisions and Schedules 3A and 3B to appropriately refer to domestic and foreign ‘‘politically exposed persons’’, as distinct from ‘‘politically influential persons’’, who will be dealt with in a new Schedule 3C; by amending certain provisions relating to resolutions of the Security Council of the United Nations; by amending the powers of access by authorised representatives to records of accountable institutions; by enabling the Centre to renew a direction not to proceed with a transaction; by providing for the safeguarding of information; by amending the provisions relating to the disclosure of information to the Centre and access to information by the Centre; by empowering the Minister to prescribe appropriate requirements relating to the access to personal information to ensure that 37 adequate safeguards are in place as required by section 6(1)(c) of the Protection of Personal Information Act, 2013; by amending certain provisions relating to the risk management and compliance programme; by amending the offences provisions to empower the imposition of an administrative sanction; by amending the provision relating to the amendment by the Minister of Schedule 2; by amending Schedules 2, 3A and 3B, and by inserting a new Schedule 3C; and by substituting the index for an arrangement of sections; 2.1.4. the Companies Act, 2008, (clause 52-57) through inserting a definition of ‘‘beneficial owner’’; by providing for a comprehensive mechanism through which the Companies and Intellectual
 Property Commission can keep accurate and updated beneficial ownership information; by requiring a company to keep a record of a natural person who owns or controls the company in terms of the definition of ‘‘beneficial owner’’, and by providing for specified timelines within which the company must record any changes in this information; by requiring a company to file a record of any natural person who owns or controls the company in terms the definition of ‘‘beneficial owner’’, with the Commission; and by specifying that persons who are convicted of offences relating to money laundering, terrorist financing, or proliferation financing activities are prohibited from registering as company directors; and 2.1.5. the Financial Sector Regulation Act, 2017, ( 58-61) through providing that a financial institution, key person, representative or contractor to which a regulator’s directive in terms of Part 2 of Chapter 10 has been issued must comply with the directive; by inserting a new Chapter dealing with beneficial owners into the Act, which provides a definition of ‘‘beneficial owner’’ and empowers standards and regulator’s directives to be made in relation to beneficial owners; and to provide for matters connected therewith.
38 3.

PUBLIC PARTICIPATION 3.1.

The Committee was briefed on the Bill by the National Treasury and the FIC on 31 August 2022 and held public hearings on 11 October 2022.

The comment period was subsequently unanimously extended by the Committee to 25 October 2022, following from most commentators raising concerns about the short period that was allowed for the public to comment on the Bill.

3.2.
3.2.

National Treasury and the FIC presented their detailed responses on the Bill to the Committee on 18 October 2022 and on 28 October 2022, addressing all the comments made during the public hearings, Committee briefings and deliberations.

3.3.

A combined total of 59 public submissions were received during the public participation process.

A total of 43 comments were received for the period up to 11 October 2022, and a further 16 after the deadline was extended to 25 October 2022.

3.4.
The written and oral submissions were received from the following organisations and/or individuals: Cosatu, amaBhungane and Corruption Watch, NPO Working Group, Freedom of Religion South Africa, Cause for Justice (CFJ), Media Monitoring Africa (MMA), Open Ownership, Johannesburg Stock Exchange (JSE), Afrikaanse Protestante Kerk, Alliance of Pentecostal & Charismatic Churches in SA, Apostolic Faith Mission of SA, ASISA, Badisa, Banking Association of South Africa (BASA), Carol Korner, Christian Family Church International, Church of the Holy Spirit, Creativity Will Save Us, Fellowship of Community Churches NPC, Full Gospel Church South Africa, Harvest Christian Church, Joshua Generation Church, Kweco, Maranatha, Mr Majola, R2K, Shoprite Checkers (Pty) Ltd, Social Change Assistance Trust, Association of Vineyard Churches SA, True-North, Computershare (Pty) Ltd, Webber Wentzel, Helen Suzman Foundation, Inkululeko Yesizwe Association, Milk Matters, Law Society South Africa (LSSA), Free State Care in Action, South African Institute of Stockbrokers, Dear SA, Free Market Foundation (FMF), Institute of Race 39 Relations (IRR), Southern African Catholic Bishops’ Conference, Anna Vayanos, Sakeliga, Biowatch, Christian View Network, National Automobile Dealers’ Association, Word of Grace Ministries, Intellidex Pty Ltd., Dominique Pitot, Citizen Leader Lab NPC, Kingfisher FM, Fiduciary Institute of Southern Africa (FISA), Fish Hoek Ratepayers and Residents Association (FHVRRA), Virgil Hill, 4Hope, Mikhulu Child Development Trust, Outsurance, Southern African Institute of Business Accountants (SAIBA).
4.

ISSUES RAISED DURING PUBLIC HEARINGS AND RESPONSES FROM NATIONAL TREASURY AND THE FINANCIAL INTELLIGENCE CENTRE 4.1.

General Comments 4.1.1.

The Committee received general comments regarding the time period for public comments.

Almost all commentators submitted that the time period of just over one month (between 31 August and 11 October 2022) given for public comments was not enough.

As a result of this the Committee unanimously extended the time period for public comments to 25 October 2022.
It is noted that many comments received on the second deadline were repetitive of the comments that had been received on 11 October 2022.

4.1.2.

Comments were received by the Committee regarding the lack of a Socio-Economic Impact Assessment Study (SEIAS) on the GLAB.

It was submitted that without the National Treasury and the FIC conducting an impact assessment study, it would be difficult to assess the costs and benefits of the GLAB.
The National Treasury responded that it had received an exemption from conducting a SEIA on this Bill due to the consequences of not processing the Bill on an urgent basis.

After addressing correspondence to the Minister of Finance on 2 November, the Minister of Finance responded on 03 November to clarify the issues of SEIAS.
The Minister stated that: 40 “…The National Treasury requested the Presidency to exempt the draft Bill from the application of SEIAS due to urgency to address some of the deficiencies to avoid grery listing by the Financial Action Task Force and because such grey listing may result in the financial institutions abroad severing or limiting transactions with South African financial institutions.
Following this request and the submission of the completed SEIAAS significant test template, the Presidency, on 26 July 2022, exempted the application of the SEIAS to the draft Bill… In obtaining approval for tabling the Bill, I presented to Cabinet the socio- economic implications on being grey listed and therefore the need for the Bill.
In my submission I outlined the Bill, if enacted, would assist in strengthening the country’s Anti-Money Laundering and the Combating of the Financing of Terrorism (AML/CFT) system and support Medium-Term Strategic Framework priority 2 on Economic Transformation and Job Creation, and priority 6 on social cohesion and safer communities.

It would also support the fight against corruption and the implementation of the National Anti-Corruption Strategy (NACS) approved by Cabinet on 18 November 2020…” 4.1.3.
Issues were raised in the hearings that there needs to be a sufficient transitional period for the implementation of “Beneficial Ownership” requirements as contemplated in the various pieces of legislation being amended.

The main reason given for this was that it will, for instance, take some time to implement and access Beneficial Ownership registers and information as this may also require technical system enhancements.
The National Treasury and the FIC assured the commentators that regulators will assist accountable institutions in ensuring that they receive the necessary support to implement the new requirements before any enforcement action is taken for non- compliance with the new obligations.

4.1.4.

It was submitted that the Bill almost gives the executive arm of government unfettered 41 powers to make regulations on access to information that is mainly private, particularly in respect of trusts.
It was argued that this may violate the right to privacy of trustees and beneficiaries.

The National Treasury and the FIC assured the commentators and the Committee that any future regulations in respect of this Bill will be published for public comments.

It was also added that access to information on the Beneficial Ownership registers will be controlled in terms of regulation.

4.1.5.
4.1.5.

Several comments were made in relation to the definition of Beneficial Ownership and other concepts such as “Beneficial Interest” and “Legal Ownership”.

The National Treasury accepted some of these comments and made some refinements two the concept of “Beneficial Owner” in the final version of the Bill.

4.1.6.

A comment was received that instead of amending FIC Act, the Companies Act and the Financial Sector Regulation Act, the Bill should scrap of the Trust Property Control Act.
National Treasury responded that this will not be feasible as trust law and trusts are an integral part of South Africa’s legal system.

It was also stated that the Regulation of Trust Property Bill, which will replace the Trust Property Control Act, was at an advanced stage of development.

4.2.

Trust Property Control Act amendments in the Bill 4.2.1.
Several comments were received in respect of the definition of “Beneficial Ownership” and its ambit in the amendment to the Trust Property Control Act (TPCA).

It was submitted that the definition in the Bill conflicts with some provisions of the TPCA.

Several comments were also received regarding the inclusion of trustees, who are not beneficiaries, under the definition of Beneficial Ownership.
The National Treasury and the FIC clarified that the trustees were not included in the definition on the basis that they owned or held the property for their own benefit, but on the basis that they administered or exercised control over the property.

42 4.3.

Nonprofit Organisation Act amendments in the Bill 4.3.1.

Many commentators opposed the compulsory and blanket requirement for all non-profit organisations to register.
The National Treasury and the FIC conceded, after engagements with the NPO sector to adjust the initial proposal of a blanket registration requirement.

The new proposed amendment in the B version of the Bill now focuses on the registration of a limited subset of NPOs that make donations or provide services beyond South Africa’s borders, where they could potentially be used, intentionally or unwittingly, to finance terrorism.

4.3.2.
4.3.2.

Commentators submitted that it would be inappropriate for the Department of Social Development to accommodate the Non-Profit Directorate that will perform activities envisaged in the Bill.

Some argued that a body independent of the DSD and well capacitated be established.

The main reasons for this opposition were issues of capacity and that the Bill intends to fight against money laundering and terrorism financing, which are not the activities of the DSD.
The National Treasury appreciated these comments and has made refinements to the initial proposals in the Bill.

4.4.

Companies Act amendments in the Bill 4.4.1.

A submission was made for the expansion of the definition of “foreign company” in the Bill to also include “foreign voluntary associations” that may be carrying out non-profit activities in South Africa with the Companies Intellectual Property Commission (CIPC).
This proposal was not accepted by the National Treasury, which stated that CIPC did not support taking over the mandate which falls under another Department.

The CIPC however continues to cater for foreign non-profit companies operating in 43 South Africa.

4.4.2.

An objection was received in relation to giving the powers, through regulation, to specify the “prescribed information” regarding natural persons who are beneficial owners of a company that a company must record in its securities register.
It was said that this clause was too broad and may violate the Rule of Law and the Bill of Rights.

However National Treasury clarified that the power of the Minister will relate to “information relating to beneficial ownership” and will be governed by regulations which the public will be consulted on.

National Treasury also reminded the commentators that subordinate legislation (regulations) cannot amend primary legislation but is aimed at elucidating the detail and providing guidance.

4.4.3.
4.4.3.

Concerns were raised about clause 59 of the original Bill which sought to allow regulators to set standards on beneficial ownership.

It was submitted that this clause unduly delegated to financial regulators the power to amend the statutory definition of beneficial ownership.

It was submitted that this will enable regulators to create exclusions.

5.

Amendments to the Bill submitted 5.1.


The Standing Committee received, on 03 and 10 November 2022, the A- list of proposed amendments to the original version of the Bill that was tabled.

The Bill was also amended to reflect the changes in the A list, which the Committee considered on 11 November 2022.

6.

COMMITTEE OBSERVATIONS AND RECOMMENDATIONS 6.1.

The Committee notes the interest by the public in this Bill.
This is shown in the number of comments received from the public and the Committee having to extend the 44 submission deadlines.

The Committee appreciates this participation and the invaluable public comments which have led to the refinements of the Bill as presented by the National Treasury in the A- list dated 03 November 2022.

6.2.

The Committee notes that the Bill was processed under tight deadlines, especially with threats of South Africa facing a grey listing by FATF.
The Committee has previously made it clear that our country cannot afford a grey listing by FATF as that might have a negative impact on trade and the economy.

6.3.

Although grey listing by FATF does not necessarily mean that countries must not deal with a particular country, the mere naming and shaming exercise by FATF could lead to “severe and adverse economic consequences for trade and transactions with other countries”, as the Minister observed in his letter to the Committee dated 03 November 2022.
6.4.

However, the Committee believes that legislation of this nature cannot be pushed through without adequate public participation.

While South Africa needs to comply with global standards, it also must comply with its domestic laws and the Constitution, which demand public involvement and participation.

That is the reason the Committee extended the public participation deadline, as explained above.

6.5.
6.5.

The Committee believes that a Socio-Economic Impact Assessment (SEIA) study should have been conducted to evaluate the costs and benefits of the changes proposed by the Bill.

The Committee however notes that due to the urgency of processing this Bill, an exemption by the Presidency was granted to the National Treasury, in July 2022, to dispense with the SEIAS requirement in respect of this Bill.
Following correspondence between the Committee and the Minister of Finance, the issue of the SEIAS was clarified to the Committee by the Minister.

The Committee, however, does not encourage the processing of legislation in this fashion, but understands the urgency of preventing South Africa from being grey listed by FATF in February 2023.

The 45 Committee will monitor closely the implementation of this Bill through regular briefings by the National Treasury and the FIC and other related parties.

6.6.
6.6.

The Committee notes that the GLAB is an omnibus Bill that is aimed at amending many pieces of legislation, some of which do not fall under the legislative and oversight mandate of the Committee.

The Chairperson of the Committee will write to the Speaker of Parliament to recommend that in the future such legislation be referred to all the affected Portfolio Committees for joint processing and consideration.

6.7.
6.7.

The Committee notes the general concerns raised by religious organisations and persons and the general NPO community to the onerous provisions of this Bill.

The Committee believes that these concerns have been addressed through the amendments as reflected in the A list of the Bill, particularly to clause 10 which provided for “prescribed registration requirements” for NPOs.
The legal opinion obtained by National Treasury from senior counsel, dated 01 November 2022, has analysed the provisions of the Bill in respect of their compliance with the Bill of Rights in the Constitution and advised accordingly.

6.8.

The Committee was shown evidence by the FIC that NPOs, including religious organisations, are at risk, wittingly or unwittingly, of being used for money laundering and terrorism financing.
While the Committee appreciates the evidence provided by the FIC in this regard, the Committee believes that the FIC should have presented more international examples of how religious organisations and NPOs have in the past been used to launder money and finance terrorism.

The Committee believes that the regulation of non-profit organisations is necessary but believes that a risk-based approach is necessary in order to alleviate the burden of regulation on low-risk communities.

7.

CONCLUSION 7.1.
7.

CONCLUSION 7.1.

The Committee agrees with amendments proposed in the A list of the Bill 7.2.

The Committee reports the Bill, [B18B-2022].

46 The Democratic Alliance (DA) and African Christian Democratic Party (ACDP) reserve their position.

Report to be considered.

47 4.


REPORT OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON OVERSIGHT VISIT TO MAKANA 16-19 SEPTEMBER 2022, DATED 25 OCTOBER 2022 Having conducted an oversight visit to the Makana Local Municipality under the Sarah Baartman District, from 16 – 19 September 2022, the Portfolio Committee on Cooperative Governance and Traditional Affairs reports as follows: Delegation: Hon.

F. Xasa (Chairperson, ANC); Hon.


D. Direko (ANC); Hon P. Xaba-Ntshaba (ANC); Hon.

G. Mpumza (ANC); Hon B. Hadebe (ANC), Hon C. Brink (DA) and Hon.

E. Spies (DA).

Committee Support Staff: Ms. S. Cassiem (Committee Secretary); Mr. A. Sokomani (Content Advisor); Mr. M. Dumezweni (Committee Assistant).

1.
1.

INTRODUCTION The Portfolio Committee on Cooperative Governance and Traditional Affairs has resolved that over its current term of office in Parliament (2019-2024) it will intensify oversight over all the organs of state relevant to its mandate, in line with the intent of Parliament’s 2019 -2024 Strategic Plan.
This approach is the Committee’s strategy to confront the deteriorating state of local government in the country, encourage public participation in the affairs of local government as envisaged in Section 152(1)(e) of the Constitution.

The 2020/21 Municipal Finance Management Act (MFMA) audit outcomes have highlighted several municipalities that have received consecutive disclaimed audit opinions despite being under constitutional intervention.
A disclaimed audit opinion is the worst opinion a municipality can obtain.

These municipalities are also subject to investigation by the Auditor-General regarding material irregularities identified in the course of audit.

Not surprisingly, these municipalities are also among the 64 municipalities that have been identified as dysfunctional by the Department of Cooperative Governance’s State of Local Government Report to Cabinet.
These municipalities are: • Northwest: Kgetlengriver, Madibeng, Naledi, Ditsobotla and Ramotshere Moiloa.

• Northern Cape: Phokwane and Renosterberg.

• Mpumalanga: Lekwa • KwaZulu-Natal: Nquthu and Ilanga Libalele • Eastern Cape: Makana 48 The Portfolio Committee has resolved to conduct intensive oversight visits to these municipalities, starting in Makana, which is the subject of this oversight report.

2.
DAY 1: ORIENTATION MEETING WITH THE OVERSIGHT STRUCTURES RESPONSIBLE FOR OVERSEEING MAKANA LOCAL MUNICIPALITY On the first day of the oversight, the Committee convened an orientation meeting with the structures responsible for oversight over the Makana Local Municipality, namely the Eastern Cape Provincial Department of Cooperative Governance and Traditional Affairs (COGTA), national Department of COGTA, Eastern Cape Provincial Treasury; Office of the Auditor- General (AG) in the province, and the provincial office of the South African Local Government Association (SALGA).
The purpose of this session was for the Committee to have a holistic overview of the pertinent issues that will assist it to engage the municipality from a well-informed perspective.

• Eastern Cape Provincial Department of COGTA The Department anchored its support to Makana on the Back to Basics and Financial Recovery Plan (FRP) pillars.
The municipal political situation is reportedly stable: council is sitting, the position of the Executive Mayor is filled, Troika (Executive Mayor, Speaker and Council Chief Whip) meetings are taking place, the register to capture council resolutions is functional and the administration implements the resolutions, the Local Labour Forum (LLF) is sitting, and Section 79 and 80 Committees have been established.
The Municipal Public Accounts Committee (MPAC) was only established in November 2021 and therefore its functionality cannot yet be determined.

While most positions have been filled (except the Local Economic Development Director), the administration is also still fairly new and lacks institutional memory.

The Provincial Treasury leads the implementation of the municipality’s FRP.

However, the Department is confident that the municipality is implementing the activities reflected in the FRP.
The Department is not satisfied with the implementation of the audit improvement plan submitted by the municipality to address the consecutive disclaimed audit opinions received over the past three financial years.

Expenditure on conditional grants has been problematic since the District is no longer receiving the grants on the municipality’s behalf.

While there a several catalytic projects in progress in Makana, the aged municipal infrastructure is a serious constraint to economic growth.
The key challenge facing the municipality relates to water and sanitation.

The municipal water and sanitation infrastructure has exceeded its design lifespan and needs upgrading.

The most critical interventions relate to the upgrading of the Belmont, Mayfield and James Kleynhans Waste Water Treatment Works (WWTW).

However, the available infrastructure grants are insufficient, and dedicated funding is needed to replace the aged infrastructure.
The municipality’s water and sanitation problems are unlikely to be resolved 49 until there is sufficient injection of funds.

• Eastern Cape Provincial Treasury Makana previously passed unfunded budgets.

Through the Provincial Treasury’s intervention, the municipality has successfully passed funded budgets during the last three financial years.

However, most of the municipality’s financial health ratios are unfavourable.
At the time of passing unfunded budgets the municipality was obtaining qualified audit opinions, following the Provincial Treasury’s deployment of an acting Chief Financial Officer (CFO).

Unauthorised, Irregular, Fruitless and Wasteful (UIFW) expenditure has been increasing.

In 2020/21, the municipality is responsible for 46 percent of the unauthorised expenditure incurred by all municipalities under the Sarah Baartman District.
Although the Municipal Financial Disciplinary Board exists, and the Provincial Treasury is part of it, it is non-functional.

Disciplinary Board meetings are not taking place.

The MPAC has not done any expenditure write-offs.

The municipality’s expenditure on overtime is also of concern.

Salary payments are becoming unaffordable.

Conditional grant expenditure is problematic as the municipality applies for roll- overs every financial year.

Payment of the municipality’s Eskom account has been improving.
The municipality has settled all Eskom historical debt and is now addressing the current account.

There are still monies owed to SALGA, Amatola Water Board (AWB), Water and Sanitation Department and the Auditor-General.

Provincial Treasury last received a progress report on the implementation of Makana’s FRP in July 2022.

The FRP has not permeated through the whole institution, and Provincial Treasury’s recommendations are not adhered to.
Although the Provincial Treasury is usually physically present at the municipality to review annual financial statements before submission for auditing, critical vacancies in Makana’s Budget and Treasury Office (BTO), Supply Chain Management (SCM) and the CFO’s office hamper the effectiveness of the support.

It is hoped that the newly appointed CFO will improve the financial accounting process.
While the Provincial Treasury is receiving the monthly Section 71 reports from the municipality, it has to contend with significant issues of data integrity, including disparities in the data provided, which are difficult to prevent from outside the municipality.

To address the identified challenges, the Provincial Treasury proposes a structured approach focusing on the short, medium and the long-term.
In the short term, efforts should be facilitated to ensure municipal financial viability; high staff morale should be maintained and skilled competent staff to be attracted; and effective financial control and oversight should be ensured.

In the medium term, priority should be given to the effort to address infrastructure backlogs, and on community involvement on all service delivery fronts.
In the long term, there should detailed long-term planning around financial stability; development of Makana as regional economic hub; and creating investment opportunities towards a thriving, safe and healthy community.

50 • Eastern Cape Auditor-General The provincial office of the Auditor-General in the Eastern Cape emphasized the stagnation in the municipality’s audit outcomes, highlighting repeat findings on both service delivery and financial performance information.
No sufficient evidence has been provided to confirm reported achievements.

The municipality’s consecutive disclaimed audit opinions are the worst audit opinions possible, as the figures provided are not consistent with the underlying records, and vice-versa.

The documentation justifying the adjustments made in the figures has not been provided.
The disclosed irregular expenditure and contingent liabilities were not substantiated by records, resulting in uncertainty as to whether the provided figures are understated or overstated.

Irregular expenditure that was not reported in the municipal annual financial statements was also identified.

Although there is apparent reduction in irregular expenditure, from R54m to R25m, the auditors could not verify the provided figures’ accuracy.
The lack of supporting documentation is an area most susceptible to manipulation.

Makana’s poor revenue accounting systems is another area of great concern for the auditors.

The municipality mainly relies on estimates, without evidence of meter readings conducted to verify the estimates.

The repeat findings against the municipality is an indication that it is in need of serious intervention.
Its poor performance has led to the identification of a material irregularity (MI), as the consequences involve substantial harm to the citizenry.

Some of the activities undertaken by the accounting officer to address the MI are still in progress, but progress reports have not been forthcoming, despite extension of deadlines.

Non-receipt of information, and slow action and response to the recommendations of municipal oversight structures are indicative of poor discipline.
The history of instability in Makana’s administrative and political leadership means that there has been no leadership tone set from the top.

This legacy of a dysfunctional and toxic environment is a key root cause of Makana’s consecutive audit disclaimers.

• Eastern Cape South African Local Government Association SALGA briefed the Portfolio Committee on the support rendered to Makana.
The support is a collective effort between SALGA, the Municipal Infrastructure Support Agent (MISA), Provincial COGTA, Provincial Treasury and civil society.

The issues plaguing Makana are mainly historical in nature.

Civil society organisations in Makana, including the Unemployed People’s Movement (UPM), have been engaged to aid in crafting a programme of action around the municipality’s governance, finance and related challenges.
This has assisted to clear confusion around roles and responsibilities in the municipality.

SALGA has also identified Makana as a pilot site for testing the Good Governance Maturity Index being developed from its national office.

51 MPAC and Ethics and Integrity committee members have been trained on King IV report principles as part of enhancing oversight capacity.
Working sessions on UIFW, budgeting, preparation of annual financial statements, Municipal Standard Chart of Accounts (mSCOA) and related issues, have been convened.

SALGA has been visiting the municipality monthly to provide support on identified areas, including review of certain by-laws and alignment of the municipality’s performance management system (PMS) to organisational strategy.
Councillors have been capacitated to understand Waste Water Treatment Works performance in terms of Blue, Green and No-Drop programmes.

Some of the litigation against the municipality has centred on waste management, which has also attracted the South African Human Rights Commission’s attention as the custodian of environmental and other constitutional rights.
• National Department of Cooperative Governance/MISA Like SALGA in the province, the Department emphasized that the support provided to Makana has been a collective effort.

Expenditure related problems in the municipality have resurfaced because the Sarah Baartman District is no longer receiving and spending grants on the municipality’s behalf.

Reporting on the Municipal Infrastructure Grant (MIG) expenditure is particularly problematic as the implementation of MIG projects in not documented.
This contravenes MIG reporting requirements.

Makana also needs a major infrastructure upgrade as the existing infrastructure is not fit for purpose.

The funds currently received through the division of revenue process are insufficient to address the required scale of infrastructure upgrade.

The sanitation infrastructure is in a particularly dire state.

All wastewater treatment works are stretched beyond capacity leading to overburdened sewer lines and sewer overflows.
Most are beyond repair and need urgent replacement.

The E. coli levels on the municipality’s water and sanitation infrastructure have not been officially tested.

Makana, like the rest of the municipalities in the district, is also contending with serious water shortages.

Only the James Kleynhans Water Treatment Plant is functional but its daily capacity of 10 mega litres is insufficient to meet the daily demand of 18 mega litres.
Inefficiencies by the Department of Water and Sanitation, Amatola Water Board and a contractor known as Mamlambo have stalled the work to upgrade the plant, which has been in progress since 2016.

Supplementary water supply sources, such as springs and boreholes, are inadequate.

Some of the springs and boreholes have failed to pass NGO-administered E. coli level tests and have therefore been discontinued.

Issues of inequitable access to water in towns such as Makhanda have also been observed.
The town’s poorer eastern side is often by-passed in favour of the more affluent western side.

52 The state of road infrastructure is also a matter of concern for the Department.

MISA has concluded that approximately R300m will be needed to address the state of disrepair in the municipality’s roads.

The Department has observed that the SCM space in the municipality is very contested.
The engineers deployed by MISA to provide technical assistance to the municipality have been barred from participating and advising on SCM-related processes.

Makana has serious internal technical capacity deficiencies that cause it to rely heavily on external service providers.

The municipality needs more than the technical support provided by MISA.

3.
3.

DAY 2: ENGAGEMENT WITH THE SARAH BAARTMAN DISTRICT, MAKANA LOCAL MUNICIPALITY AND COMMUNITY STAKEHOLDERS • Sarah Baartman District Due to a misreading of the brief, the District’s presentation not only covered Makana, but also all the local municipalities under the District’s jurisdiction.

Most of the District’s functions have been delegated to the local municipalities, including environmental functions and fire services.
The local municipalities are also Water Services Authorities (WSAs) and Water Services Providers (WSPs).

The District is considering advocating to be a WSA, as it is currently the only District in the province that is not a WSA.

The District is also lobbying for housing-related functions and the implementation of Regional Bulk Infrastructure Grant (RBIG) projects, as it is also capable of handling these.

The Portfolio Committee’s support in these endeavours would be appreciated.
Sarah Baartman is currently mainly responsible for Intergovernmental Relations (IGR) including overseeing the establishment of a district-wide infrastructure forum, municipal manager’s forum and CFO forum.

Municipalities that do not participate in the IGR structures have been noted, and the District is addressing the matter.

The District has also assessed the District Development Model’s (DDM) One Plans.
The assessment has identified some gaps, including insufficient involvement of traditional and Khoi-San leaders.

The District is in the process of addressing these gaps.

The District is not proud of its stagnation on unqualified audits.

It should be receiving clean audits as it does not have many service delivery functions.

The revenue collection rate for all the local municipalities under the District is below 90 percent.
The debtors account is an increasing problem, and although it mainly relates to households, there are also problematic government departments and businesses.

The District has been exposed to severe drought since 2016, and this has seen the implementation of water shedding.

Most service delivery protests around the District relate to water provision.

A request for a ministerial intervention in the drought, focusing specifically on the Sarah Baartman District, has been lodged.
The District has also been experiencing serious problems with the Amatola Water Board, which is entrusted with government funds but does not have the capacity to implement projects.

Had the Board implemented projects successfully, most of the water 53 problems would have been averted.

• Makana Local Municipality As it had submitted to the Portfolio Committee on a previous occasion, the municipality reiterated that it used to be one of the best-run municipalities in the province.
Poor decision-making led to the collapse of internal municipal systems, which placed the municipality on a downward trajectory.

The new Council has resolved to stabilise the administration and mend lost trust so that people are once again willing to pay for municipal services.

The recent appointments of senior managers will address institutional capacity constraints.

The Municipal Manager’s contract is soon ending, and the recruitment process for a new accounting officer is 95 percent complete.
Shortage of general workers remains a problem that affects municipal capacity to perform its functions.

The municipality’s job evaluation exercise to streamline the organogram has encountered extreme resistance from employees.

Progress on this matter has therefore been very slow.

The District’s assistance has been enlisted but due to the difficulties encountered, an external service provider has been appointed.

Investigations relating to the Kabuso and Morar Reports are still ongoing.
The municipality has invited Treasury and COGTA in the province to assist on SCM and risk management processes.

One of the most critical challenge is the provision of water, especially in the eastern side of Makhanda.

Delays in upgrades to the James Kleynhans Water Treatment Plant are having an adverse impact on water provision in the municipality.

The project’s completion deadline has shifted to 30 June 2023 as the main contractor went bankrupt.
The municipality will be utilising the sub-contractors to complete the project.

The Special Investigation Unit (SIU) is due to table an investigative report on the escalating project costs allegedly arising from the widening of project scope.

The Portfolio Committee was urged to follow up with the Standing Committee on Public Accounts (SCOPA) on this matter.

The municipality has not always been successful in keeping the citizenry informed about its programmes to address the water challenges.
Makana has also been experiencing a plethora of litigation around waste management.

In this regard, funding support has been received from the provincial environmental department to address waste management issues.

A service provider has been appointed to manage the municipality’s waste disposal site.

Major funding is required to address the dysfunctions in 54 Makana’s Belmont Valley (which was designed for a limited population) and Mayfield Waste Water Treatment Plants.
Currently, no human settlement development around Belmont Valley can go ahead due to the plant’s non-conducive state.

Rehabilitating the plant will cost approximately R250m.

In the absence of external funding, the municipality will upgrade the plant incrementally, using the small amounts of grants at its disposal.

These amount to approximately R30m annually.

Payment of municipal creditors also remains a serious challenge.
Although Eskom arrear debt has been settled, the municipality is starting to fall back into arrears.

A repayment agreement has been concluded with SALGA.

The CFO has been instructed to recover monies owed by municipal employees.

The majority of the municipality’s debtors are poor households and the municipality’s indigent register needs to be adjusted to reflect this.

Some debtors are unwilling to pay due to inaccuracies in the municipal billing system.
As part of improving revenue collection, the District has assisted the municipality by conducting a door-to-door data cleansing exercise; installed smart water meters; embarked on weekly disconnection programmes; devised a debt incentive scheme; and will sell unused assets.

Despite the adoption of a funded budget, the municipality’s most critical financial health ratios remain unfavourable.
Some of this is attributed to service providers who are now demanding advance payment owing to the municipality’s history of chronic late payments.

A session will be convened with the service providers to resolve this matter.

There are four work-streams dedicated to the implementation of Makana’s FRP.

Monthly meetings are convened and progress reports submitted to COGTA and Treasury.

The FRP’s implementation so far has seen the municipality’s salary bill reducing from 45 percent to 37 percent.
However, provincial government support in the implementation of the FRP is not as substantive as the municipality would have loved to see.

The municipality is under mandatory financial recovery for the third time, as FRPs were imposed in 2016, 2019 and 2021.

As part of implementing its post-audit action plan, the municipality has appointed an internal assets accountant to deal with assets-related audit findings, including ensuring that the asset register is GRAP 17-compliant.
Leave automation has been introduced to address challenges around manual leave management.

Remedial measures have also been introduced to curb the abuse of municipal fleet.

The MPAC is finalising a report on UIFW consequence management.

However, there is less consequence management than the municipality would like to see.

During the recalled MPAC Chair’s tenure, the Committee functioned poorly.

The current Chair was appointed during the last council sitting.
The Committee will be dealing with backlogs going as far back as 2014/15.

All council committees are sitting, including a risk management committee, and an external audit committee to address the consecutive disclaimed audit findings.

The disclaimers reflect the history of poor working relations between the previous executive Mayor and the Accounting 55 Officer, which the Auditor-General has characterised as a manifestation of poor political leadership.
On the question of material irregularities and the finding that no municipal official could be held accountable, it was clarified that this was not the accounting officer’s finding, but that of the external audit committee.

Although the municipality faces serious challenges around water, sewer, roads, illegal dumping and a high unemployment rate, service delivery has improved compared to 2016.
For example, there is now daily refuse collection (except on weekends to manage overtime claims) and the community has access to potable water.

New garbage trucks are expected towards the end of October 2022.

The municipal political leadership affirmed its interest to change the situation in Makana and deliver on its promise to the communities.

• Stakeholder engagement Several stakeholders in Makana were invited to contribute perspectives on the state of the municipality.
Oral presentations were received from representatives of the Unemployed Peoples Movement; Makhanda Legends; Makhanda Business Forum; Kagiso Trust; Makhanda Circle of Unity; Public Service Accountability Monitor; Grahamstown National Arts Festival; Makana Residents Association and from Rhodes University’s Professor Pedro Tabensky.

Written inputs were also received from the Makana Citizens Front, Rhodes University, and Carin Swart (Makhanda Ward 4 citizen).
The following is a summary of key inputs from these stakeholders.

Unemployed People’s Movement.

The problem of access to water remains unresolved.

The Joza area has been without water for four days and the municipality has not provided any alternative water supply.

Consequently, learners cannot attend classes.

When available, the water is of poor quality and unfit for consumption.

Water Treatment Plants are unsafe and vulnerable to deliberate pollution.
If not made a national key point, they should at least be protected.

Makhanda Legends.

The organisation has tabled a petition relating to governance issues in the municipality, including the question of consecutive disclaimers.

No response has been received to date.

Another petition submitted to SCOPA has also elicited non-response.

The municipal manager, Mr. Mene, has a history of disclaimers and his continued employ in the municipality is inexplicable.
The municipality appears to be a dumping ground for incompetent individuals.

The Portfolio Committee must pay attention to the abuse of overtime and municipal vehicles, employees’ academic qualifications, and the moral conduct of municipal leaders.

A Commission of Inquiry into the state of local government will go a long way in preventing siphoning of funds from the municipality.

56 Makhanda Business Forum.


The Forum has keen interest in the creation of an enabling environment for business to thrive in Makhanda.

While the national unemployment rate is already too high, it is even worse in the municipal area.

The municipal environment is not conducive to economic activity due to infrastructure and governance deficiencies, institutional incapacity, excessive overtime claims, poor community linkages, ineffective stakeholder engagement, and unrealistic budgets.
In 2014, the then administrator Ms Pam Yako raised these issues and the municipality has not resolved them.

MISA’s road resurfacing intervention has been fantastic and should continue.

Urgent upgrades to the electricity distribution network, and Waste Water Treatment Works, are needed.

The Central Business District (CBD) has gone as long as three days without power supply.

Makana has never provided relief to ratepayers.


The Forum is still awaiting the report emanating from SCOPA’s oversight visit in mid-2021.

The Makana Citizen’s Front recently won five seats in the municipal council, which is indicative of citizens’ frustration with municipal failures.

Political assassinations, including killing of whistle blowers, are an increasing concern.

The municipality has also failed to honour court judgments on waste management, Eskom debt, and the UPM case.
The Forum echoes the sentiment that real state capture happens at the local government level.

It calls on the Portfolio Committee to ensure that COGTA delivers on its municipal support and oversight mandate Kagiso Trust.

The Trust’s main interest is the socio-economic development of disadvantaged communities.

It envisions local government as a key player in this regard, and Makana has a potential to be a role model for the rest of the country.
All the issues highlighted previously are symptoms whose root cause lies in the collaboration deficit between the municipality and citizens.

These issues are not foreign to the municipality, and are not insurmountable if municipal personnel have the right attitude, eschew silo mentality and pursue an organisational strategy.

The current organisational culture is chaotic, and it is therefore unsurprising that municipal performance, by the municipality’s own admission, is 50 percent and below.
Although the problems are well-understood, there is no deliberative action.

Makana is a hostile environment without any customer centricity.

Addressing this requires change in the way people view their daily function in the municipality.

The municipality must advertise collaborative intentions and create a climate of honesty and acceptance of vulnerability.

Everyone must own up to the problems, build relationships, remove polarisation, and shift from egocentric thinking to ecosystems thinking.
Local government needs to give way to local governance, which involves community structures.

Makhanda has an abundance of intellect and the municipality would do well to draw on it.

57 Professor Pedro Tabensky.

Philosopher and ethicist Prof. Tabensky highlighted the importance of community involvement in municipal affairs.

Drawing on his frustrating experience with the Home Affairs Department as a foreign national, the professor noted a culture of refusal to take responsibility.
This is a hard to break mind-set issue.

South Africans will have a hard time getting the country right if a small town like Makhanda cannot be managed properly.

Professor Tabensky also found the unhealthy relationship between the poorer Makhanda east and the more affluent Makhanda west, and the poor relationship between residents and the municipality, most troubling.

A sense of shame and humility are key to the culture shift and mind-set change required to fix Makana’s problems.
Makhanda Circle of Unity.

The organisation’s major concern is the unresponsiveness of municipal structures.

This includes the inability to provide meaningful responses within a reasonable time.

This unresponsiveness is likely to discourage citizens’ willingness to collaborate.

This will eventually push out those that can leave, but the consequences will affect those that can never leave more adversely.
The organisation would also like Parliament to provide meaningful responses to its inputs from previous engagements, including the engagement with the National Assembly Speaker on the launch of the Makhanda constituency office, and the engagement with SCOPA.

Public Service Accountability Monitor.

The organisation noted with concern Makhanda’s state of decline, and the municipality’s run-away staffing and employee costs especially those relating to overtime.
Municipalities in general rarely comply with Section 66 of the Municipal Systems Act (MSA), which deals with municipal staff establishments.

They also do not generally adhere to the guidelines of MFMA Circulars No.112 and No.115, which are municipal budget circulars for the 2022/23 Medium Term Revenue and Expenditure Forecast (MTREF).

As part of its recommendations, the organisation proposes that the municipality should submit monthly reports relating to compliance with Section 66 of the MSA.
To address the problem of ghost workers, the municipality should, by December 2022, conduct a staff headcount to verify correspondence with payroll.

Finally, the MEC must also be engaged to invoke Section 106 of the MSA.

Grahamstown National Arts Festival.

While the organisation did not wish to minimise the importance and relevance of the matters raised by other stakeholders, it believed that the negative narrative about Makhanda is one of the most critical challenges.
The organisation prides itself on being one of the strongest brand in Makhanda and on having a strong partnership with the town.

It does not envision itself functioning optimally apart from partnerships with the business and the municipality.

The issues of power supply and long-term drought were other important challenges.

Power supply shortcomings also affect water supply.

Makana’s stakeholders are oriented towards change and the introduction of new and nuanced ways of participatory governance.
The division of Makhanda into east and west, and the attendant infrastructure inequities, is also troubling to the organisation.

Unauthorised expenditure, including expenditure outside Integrated Development Plan (IDB) priorities, and the unfavourable audit outcomes are part of the bigger narrative that needs changing.

58 Makana Residents Association.

The Association submitted that Makana’s problems remained the same as when the municipality was first put under administration in 2014.
Litter collection is still unreliable, and this problem dates as far back as 2011.

Failure to get this basic function right has seen several local businesses closing down, costing jobs and livelihoods.

Inequities between the poorer east and the more affluent west remain, with the west being more capable of making itself heard compared to the east.
Over the past eight or nine years there has been several interventions and oversight visits to the municipality, but these have not made a difference, as evidenced by the municipality’s financial control and service delivery failures.

The municipal management’s active exclusion of public participation and prevention of oversight has contributed significantly to this state of affairs.
The Association drew the Portfolio Committee’s attention to the 2014 Makana Intervention Plan, which was attached to the written submission, and the important recommendations made therein, including the need to set up a customer care centre as part of a strategy to rebuild trust and enhance revenue collection.

Had the Plan been followed, it would have helped to restore the municipality as an attractive place for investment and job creation.

Makana Citizens Front.


Due to late receipt of notice relating to the Portfolio Committee’s oversight visit, the Front could not participate as it would have liked.

A written input was therefore received highlighting, among other things, lack of consequences following the SCOPA visit of May 2021 where it was clearly revealed that the Municipal Manager is not competent.
Following an oversight visit by the Portfolio Committee on Water and Sanitation, the organisation wrote a letter, for which a response is being awaited, demanding a forensic audit of failed projects.

The organisation fears that Parliament’s oversight visits risk being pointless if the dysfunctions, corruption and incompetence remain unaddressed.
Among the recommendations proposed in the submission is amendments to the MFMA to impose sanctions on senior management and political leadership in relation to irregular, fruitless and wasteful expenditure; establishment of an independent body to recover, through civil action, lost monies; and the introduction of an urgent programme to capacitate councillors to exercise their oversight function.

59 Rhodes University.


The university submitted written input drawing the Portfolio Committee’s attention to the challenges it faces due to the municipality’s inefficiency.

These inefficiencies affect the University’s capacity in several ways.

Firstly, the municipality’s inability to provide sufficient water and the imposition of a water rationing system has had enormous impact on the University’s functioning as a research-intensive and highly-residential institution.
The University’s difficulties in this regard could be somewhat mitigated if the municipality enforces adherence to the original water restriction of 50 litres per person per day.

Proper management of the water pressure in the reticulation system and reduction of the high percentage of potable water loss through leakage could also make a discernible difference.
The dire state of the municipality’s two water treatment works has seen blockage in the University’s municipal sewer pipes, resulting in raw sewerage blocking up and fountaining into several residence bathrooms.

The municipality has not actioned a proposal to expand the inlet unit at the Belmont Valley Waste Water Treatment Plant, which would be entirely sufficient to accommodate the University’s expansion strategy.
The University has had to purchase a hydro- blaster, at significant own cost, to alleviate raw sewerage overflow on campus.

In addition to load-shedding, the municipality’s inadequate and failing electricity supply infrastructure also has a highly disruptive impact on the academic project.

The municipality has stalled a plan for additional cabling and Eskom supply, notwithstanding constant pressure from the University.
To mitigate outage impact, the University has installed generators but the running costs are prohibitive.

All these challenges are impacting negatively on the University’s reputation and its ability to attract students, and appoint and retain staff.

Carin Swart (Makhanda Ward 4 Citizen).

The written submission from the Makhanda Ward 4 resident highlighted a personal experience of major service delivery issues in Makhanda.
Through the Makana Residents Association, Ms Swart brought to the municipality’s attention the illegal omission of Wards four, eight and 12 during the IDP Budget Roadshows for the May 2021 period.

This was to no avail.

Imvuso Trading, a contractor appointed to replace asbestos pipes, left asbestos waste in Ward four and other areas, and also failed to clear alien vegetation that had cropped up after construction, in contravention of environmental regulations.
When this was reported to the municipality and the contractor, there was silence from the former, and denial from the latter.

The resident also had no luck regarding a request for intervention in Coles Lane, an area outside her office window which has become a dumping ground for rubbish and human faeces.

Office windows cannot be opened due to the stench and flies.
Cows and donkeys also come to graze in the same space, causing serious disturbances, which is indicative of the municipality’s poor enforcement of animal by-laws.

The municipality has taken no action against the serious safety hazard posed by the roads around Graeme College, and uncontrolled illegal dumping in Ward four.

The municipality’s unresponsiveness has discouraged reporting of other problems such as the uncontrolled illegal cutting down of trees.
All the highlighted issues are in addition to the daily experience of water and sanitation related problems.

60 4.

DAY 3: SITE VISITS The Portfolio Committee visited three sites: The James Kleynhans Water Treatment Plant; the Belmont Valley Waste Water Treatment; and a portion of Hill Street that MISA had resurfaced.

• James Kleynhans Water Treatment Plant The manager responsible for the Makana’s Water and Sanitation Department briefed the Portfolio Committee on the state of the treatment plant.
The plant was originally designed to produce a daily yield of 10 mega litres.

Currently, the municipality is unable to supply water 24 hours a day, as water must be closed off at 20:00 every day to manage demand.

The municipality is in the process of upgrading the plant from this to 20 mega litres daily yield in order to meet the 18 mega litre daily demand.

The first phase of this work started in 2016.

The whole Makana relies on this plant for most of its water needs.
At the time of the Committee’s visit, construction work at the plant had halted due to the liquidation of the contractor, known as Mamlambo, in June 2022 as it could not pay its sub- contractors.

This has affected completion timelines for other projects, such as Ncame Road rehabilitation.

A new contractor is expected to commence work in October 2022.

The DWS has appointed the Amatola Water Board as the project’s implementing agent.
The project is therefore a tripartite agreement between the DWS, AWB and the Makana Local Municipality.

The project budget is R237m, which has escalated from the original R50m budget following project re- scoping.

The project is 85 percent complete and, at the time of the Portfolio Committee’s visit, R160m had been spent.

This leaves a balance of R77m for the project’s completion.

The plant’s water quality is not optimal, as it ranks at the bottom in terms of the blue drop status.
Contributing to this is the fact that the municipality is constrained from undertaking the required periodic flushing of water pipes to eliminate dirt due to the need to conserve as much water as possible.

• Belmont Valley Waste Water Treatment Plant This is one of the oldest Waste Water Treatment Plants in Makhanda, going as far back as the 1950s.

It was designed as 5.4 mega-litre plant.

However, over the years, demand has increased and this has seen the plant pushed to 8 mega litres beyond capacity.
The plant is dysfunctional and the non-functional components are too numerous for the municipality to quantify.

The problem will worsen as more sewage flows into the plant following the completion of the current upgrades to the conveyancing lines.

Consequently, there is little hope of compliance with the 61 green drop standard.

The plant’s state is beyond repair, and there is no value to be derived from repairing it as it has reached the end of its design lifespan.
The effluent receives minimal treatment, spills and pollutes fresh water sources.

All this makes the plant one of the key inhibitors of Makhanda’s economic growth.

The municipality has been submitting proposals for upgrading the plant to 12.4 mega-litres.

However, no adequate funding has been secured thus far.
Of the R180m required, only R31m (R16m from the Water Services Infrastructure Grant and the rest from the Municipal Infrastructure Grant) has been secured which is insufficient to improve the plant’s capacity or the effluent’s quality.

The municipality is unable to secure RBIG funding as this is already tied to the James Kleynhans Water Treatment Plant.

This is one of the ways in which the delays in James Kleynhans are impacting adversely on other projects.
Notwithstanding the insufficient funds, the municipality is progressing with the designs for the envisaged 12 mega litre upgrade.

• Hill Street, Makhanda MISA was appointed as the implementing agent for the resurfacing of Hill Street during the 2020/21 financial year.

Despite having been completed recently, the project’s workmanship quality is questionable.

It was explained that tree roots are the underlying problem that has compromised the road’s structural integrity.
In this regard, it would have been preferable to reconstruct, rather than rehabilitate the road.

Instead, the MISA appointed sub-contractor constructed the asphalt seal, and did not do any layer works as per instructions and work scope given.

MISA therefore denied that the defects emanated from the sub-contractor’s negligence, poor workmanship or use of inferior (poor quality) materials.
MISA could not assume responsibility for the design oversights or maintenance negligence, as it only came in as a funder.

5.

COMMITTEE OBSERVATIONS Having listened to inputs by the oversight structures supporting the Makana Local Municipality, the municipal stakeholders and the municipality itself, and having undertaken site visits to critical infrastructure projects in Makana, the Portfolio Committee noted the following: 5.1.
All critical financial health indicators in the municipality have deteriorated.

There seems to be no Financial Disciplinary Board in place, and there is no evidence that Makana is implementing its financial recovery plan.

It is concerning that the accounting officer has not furnished the FRP when requested to do so by the auditors considering the legal requirement to submit these progress reports to the Court Registrar in line with stipulated timeframes.

5.2.
5.2.

The provincial executive must also be held accountable for the lack of evidence regarding the implementation of the FRP.

It is not enough for the province to impose an FRP and 62 leave it at that.

The MFMA places a legal obligation on the province to monitor FRP implementation.

5.3.

Makana needs to get simple things right, including having a good political leadership and a stable administration that has will to bring positive change and promote community involvement on issues of common interest.
5.4.

While the reduction of employee-related costs from 45 percent to 37 percent is welcome, it is still concerning as this expenditure should ideally be not higher than 30 percent.

5.5.

Administrative instability is created when critical municipal posts are not filled timeously.

The recruitment process for the accounting officer should have started in time, considering that the expiry date of the current incumbent’s contract was known.

5.6.
5.6.

All the issues raised by Makana stakeholders resonate well with the matters raised by the Portfolio Committee to the municipality, including the concerns around excessive use of external service providers, and the provision of water and sanitation services.

5.7.

The oversight to Makana was most meaningful but also most disheartening.
The Portfolio Committee appreciates seeing citizens wanting to participate actively in municipal affairs, but finds it disturbing that this willingness is not finding space and acceptance within the municipality.

5.8.

Given its central role in the municipality’s key infrastructure, the Amatola Water Board should have been invited to answer some of the Portfolio Committee’s questions.

6.

COMMITTEE RECOMMENDATIONS 6.1.


The Makana Local Municipality should furnish the Portfolio Committee with a copy of its Financial Recovery Plan within 14 days.

6.2.

The municipality must also furnish the Portfolio Committee with a report providing a break-down of the R160m spent thus far in the James Kleynhans Water Treatment Plant upgrade.
The report, to be submitted within 14 days, must include the Bill of Quantities, the original project scope, additional scope details, and project completion timeframes.

6.3.

To enable the Portfolio Committee to follow-up on funding to upgrade the Belmont Valley Waste Water Treatment Plant, the Makana Local Municipality must, within 14 days, submit records of the business plans submitted to secure the funding.

6.4.
6.4.

The Portfolio Committee should start involving National Treasury when conducting oversight visits to municipalities under intervention in terms of Section 139(5)(a) of the 63 Constitution due to its central role in the preparation of mandatory Financial Recovery Plans.

6.5.

While below the 40 percent norm, the 37 percent in employee-related costs in Makana is still too high.

The municipality is advised to aim for 30 percent as the absolute maximum.

6.6.
6.6.

The Member of the Executive Council responsible for Cooperative and Traditional Affairs in the province should consider launching an investigation into Makana in terms of Section 106 of the Municipal Systems Act (2000).

6.7.

The Portfolio Committee should follow up with SCOPA regarding the SIU investigation into the James Kleynhans Water Treatment Works, and the tabling of the investigative report in the Makana council.

6.8.
6.8.

The Portfolio Committee must convene a meeting with the Makana Local Municipality, Amatola Water Board, and the Department of Water and Sanitation to discuss challenges around the completion of upgrades to the James Kleynhans Water Treatment Plant.

A copy of the tripartite agreement among these institutions should be furnished to the Portfolio Committee.

6.9.
6.9.

The responsible engineer, Mr Anton Westerberg, should be called to account to the Portfolio Committee regarding the instruction to rehabilitate rather than reconstruct Hill Street in Makhanda.

Report to be considered 64 National Council of Provinces 1.

Report of the Select Committee on Security and Justice on the Drugs and Drug Trafficking Amendment Bill [B19-2022] (National Assembly – sec 75), dated 11 November 2022.
The Select Committee on Security and Justice, having deliberated on and considered the subject of the Drugs and Drug Trafficking Amendment Bill [B19-2022] (National Assembly – sec 75), referred to it on 27 September 2022, reports that it has agreed to the Bill without proposed amendments and reports as follows: 1.

Background The Drugs and Drug Trafficking Amendment Bill [B19-2022] (National Assembly – sec 75) seeks— • to amend the Drugs and Drug Trafficking Act, 1992 (Act No.
140 of 1992) to address the constitutional invalidity of section 63 and the amendments that the Minister effected in terms of section 63, to Schedule 1 and Schedule 2.

2.
2.

Public participation process on Drugs and Drug Trafficking Amendment Bill [B19- 2022] (National Assembly – sec 75) The Select Committee on Security and Justice invited stakeholders and interested persons to make written submissions and published the adverts on Parliament’s electronic platforms and national newspapers from 18 October 2022 to 4 November 2022.

3.

Summary of Submissions: The Committee received one written submission from an individual.
The proposals contained in the submission related to matters not covered by the Bill and instead made recommendations in respect of the enforcement of the Bill.

65 4.

Committee consideration of the Drugs and Drug Trafficking Amendment Bill [B19- 2022] (National Assembly – sec 75) The Select Committee received a briefing on the Bill on 12 October 2022.
On 9 November 2022, the Select Committee received a further briefing from the Department of Justice and Constitutional Development on the written submission and the Department’s response to said submission.

Members were satisfied with the Department’s response to the written submission and the Select Committee considered the Bill as tabled and adopted the Bill without proposed amendments.

The Committee adopted the report on the Bill.

5.


Consensus on the Bill The Chairperson put the Bill for consideration: the majority of members supported the Bill.

There were no objections or abstentions.

6.


Recommendation The Select Committee on Security and Justice, having considered the Drugs and Drug Trafficking Amendment Bill [B19-2022] (National Assembly – sec 75), referred to it on 27 September 2022 and classified by the JTM as a section 75 Bill, recommends the Council pass the Bill without proposed amendments.

Report to be considered.